Goldman buys Benchmark AMC

Also intends to bring actively managed on-shore funds to India.

Goldman Sachs Asset Management on Wednesday said it agreed to buy Benchmark Asset Management Company, making an entry into India’s crowded and fiercely competitive mutual fund (MF) space.

The deal value, which was not disclosed officially, could be about Rs 120-130 crore, persons familiar with the matter said. This values Benchmark Asset Management Company at about four per cent of its assets under management of about Rs 2,935 crore as of December 31, 2010.

The transaction was expected to close later in the year, subject to regulatory approvals, Goldman Sachs said.

In addition to the buyout, which specialises in providing exchange-traded funds (ETFs), Goldman Sachs Asset Management intends to bring actively managed on-shore funds to India, it said in a statement.

Investment bank MAPE Advisory Group was the advisor to Benchmark in the deal.

Benchmark Asset Management Company, founded by Rajan Mehta and Sanjiv Shah in 2001, was the first to launch an ETF in India called Nifty BeES. At present it offers 13 products, including nine ETFs.

Globally, Goldman Sachs Asset Management, the asset management arm of Goldman Sachs Group, managed assets worth over $840 billion as of December 2010. At present, it has a team of eight, based in Mumbai, headed by Prashant Khemka. The team provides research for off-shore funds including Indian equities and BRIC (Brazil, Russia, India and China) equities.

Goldman Sachs Asset Management (India), which had received approval from the Securities and Exchange Board of India in September 2008, had earlier postponed the plan to launch its MF business following the global financial crisis. At the time, it had appointed Adam Broder as chief executive officer and Khemka as chief investment officer for the venture.

“India is one of the world’s largest growth markets and a strategic priority for our firm. The acquisition of Benchmark illustrates our commitment to expand in India and we look forward to working closely with the Benchmark to accelerate the growth of the business,” said Oliver Bolitho, head of Goldman Sachs Asset Management (Asia).

Despite tough competition and distribution challenges, the lure to grab a pie of MF business in the world’s second-fastest growing economy is attracting foreign players to India.

France’s Natixis Global Asset Management bought 25 per cent stake in IDFC MF in December 2010. Japan’s Nomura picked up 35 per cent in LIC MF, while the US’s T Rowe Price bought 26 per cent in UTI MF, both in 2009. The assets under Indian MFs have more than doubled to Rs 6,75,377 crore in the past four years. Nearly 60 per cent of these are managed by the top five players.