Prudential unit buys Deutsche India fund management business

MUMBAI (Reuters) - Prudential Financial Inc's Pramerica Investment Management is buying Deutsche Asset Management's Indian unit for an undisclosed sum, betting on a revival of India's mutual fund industry.

Asset managers in India have struggled for years with high redemptions after the financial crisis, hurting profitability.

While Deutsche Bank's sale of its Indian Asset Management business marks the latest foreign asset manager to exit the country, a recent surge in the stock market suggests fund inflows are coming back.

Net inflows into equity mutual funds reached $2 billion in June, the second-highest monthly additions since January 2008.

The Deutsche deal will help Pramerica Asset Managers Pvt Ltd, which runs its fund management business in a joint venture with local partner Dewan Housing Finance Corporation add assets under management of 207.20 billion rupees ($3.25 billion), nearly 10 times its current book of 21 billion rupees.

Deutsche, which set up its asset management business in India in 2003, said it was divesting the asset management unit to focus on its core business.

Deutsche's exit is the latest among a series of foreign firms to quit India's highly-competitive fund industry.

Last year, Kotak Mahindra Bank bought PineBridge Mutual Fund's Indian schemes, while Morgan Stanley sold its asset management unit to HDFC in 2014. Other high-profile exits include Japan's Daiwa Asset Management and Fidelity Worldwide.

($1 = 63.8500 rupees)

(Reporting by Himank Sharma, editing by David Evans)