5 MFs vie for ING's local asset management biz

L&T Mutual said to be leading the race

At least five mutual funds (MFs) — L&T Mutual Fund, Axis Mutual, BNP Paribas, Pramerica and Edelweiss —have evinced interest in buying ING Investment Management, the ING Group’s domestic asset management business. ING, the Dutch financial services company, is planning to exit its asset management and insurance businesses in Asia.

Sources said L&T was a leading contender to acquire ING Investment Management, whose assets under management (AUM) in its domestic MF business stood at Rs 672 crore as on December 31, 2013. Under the portfolio management services business, its AUM is at about Rs 400 crore. Overall assets managed by the MF sector are about Rs 9,00,000 crore

Sources said the transaction could be sealed this month.

In response to a query, ING Investment said, “ING Group is in the process of divesting its insurance and investment management businesses, including the stake in ING Investment Management India. Beyond that, we do not comment on the process.”

When asked, an L&T Finance Holdings spokesperson said he didn’t want to comment on market speculation. If L&T bags ING, it will be the firm’s second acquisition in two years; in March 2012, L&T Mutual had acquired Fidelity’s India assets.

An Axis MF spokesperson said, “We have no comments to offer.” Pramerica MF’s Managing Director and chief executive, Vijai Mantri, said, “As a policy, we do not comment on market speculation.”

A BNP Paribas MF spokesperson said the same thing, Edelweiss officials could not be reached.

Sources said ING was trying to value the deal at five-seven per cent of its AUM. A few officials said this would be steep, as most of ING’s assets were fixed-income, which usually fetched lower valuations.

In recent years, India’s mutual fund sector has witnessed many acquisitions, as several smaller fund houses are finding it unviable to operate because of a slump in stock markets and the lack of investor appetite. Foreign financial services firms are exiting, as the Indian mutual fund sector doesn’t fit into their core business, typically their home markets. Recently, Morgan Stanley sold its assets to HDFC Mutual Fund, while SBI Mutual bought Daiwa’s domestic assets.