Daiwa Group buys Shinsei's MF arm

In a deal that sets the tone for another round of consolidation in the mutual fund (MF) industry, Japan’s Daiwa Securities Group has acquired Shinsei Asset Management, the Indian mutual fund arm of Japan’s Shinsei Bank.

The sale of the asset management business also marks Shinsei’s part-exit from India. Sources said the asset management company (AMC) was valued at Rs 49.7 crore, close to 11 per cent of the assets under management. Shinsei MF managed assets worth Rs 460 crore, according to the latest data.

Shinsei has invested more than $150 million (Rs 680 crore) in India through its proprietary fund. This includes an investment in the State Industrial Corporation of Maharashtra, the investment arm of the Maharashtra government, and a hotel venture.

Shinsei Bank joined hands with leading proprietory investor Rakesh Jhunjhunwala and Freedom Financial, promoted by Sanjay Sachdev, the India head of Shinsei Corporate Advisory Services. As part of the transaction, Jhunjhunwala and Freedom would also divest their stakes, said a statement from Shinsei.

Daiwa Securities Group is looking to expand in Asia and emerging markets. The group plans to strengthen its position by entering the Indian domestic asset management business and simultaneously enhancing product offerings in Japan. This acquisition is expected to further strengthen its business platforms in Asia.

Sanjay Sachdev, country head, Shinsei Bank-India, will step down and pursue other entrepreneurial activities. The rest of the team is expected to remain unchanged after the acquisition.

In November 2008, Religare took over Lotus MF for an undisclosed sum. Industry experts said this deal was struck at a pay-to-buy model because the fund house was facing a severe financial crunch. In April 2008, Infrastructure Development Finance Corporation bought Standard Chartered MF for Rs 831 crore (5.7 per cent of the assets).