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Pramerica buys out Deutsche MF

Said to be Rs 400-cr deal; 5th exit of a foreign fund house in 2 years

BS Reporter  |  Mumbai 

Pramerica Mutual Fund has acquired the Indian asset management business of Deutsche Mutual Fund (India) for an undisclosed sum. This marks the fifth exit of a foreign asset management firm in two years.

Deutsche Bank Group said the agreement to sell its Indian asset management business to Pramerica Asset Managers was subject to customary closing conditions and regulatory approvals. Deutsche Asset Management (India) is the MF business of Deutsche Asset & Wealth Management in India.

Sources in the sector put the deal value at Rs 400 crore or two per cent of the German entity's Indian fund management arm's assets. If true, it is lower than in past transactions, where fund houses were acquired for between three and seven per cent of their asset size. The deal size couldn’t be confirmed. Sources said YES Bank was in the race to acquire the fund house, too, but had offered less.

Experts attribute the higher proportion of institutional debt assets in its overall assets under management (AUM) for the lower valuation. As on end-June, the AUM of Deutsche MF was Rs 20,720 crore, making it the second-largest foreign fund house in India, after Franklin Templeton.

Ravneet Gill, chief executive officer, Deutsche Bank Group India, said: “The divestment of our asset management business is in line with our strategy of focusing on our core businesses, where we can achieve a leadership position.”

Prior to this, Morgan Stanley MF, ING MF, Pinebridge Investments and Daiwa MF had shut their India fund management business. HDFC MF, Birla Sun Life MF, Kotak MF and SBI MF were the buyers, respectively.

The exit of Deutsche MF has when the sector has been doing exceptionally better. Overall AUM has risen nearly 40 per cent over two years. Much of retail money has also started flowing into equity schemes.

Glen Baptist, chief executive of Pramerica International Investments, said: “When the transaction is completed, we will have the scale and platform necessary to make our investment strategies available to clients across India and put us within sight of the top 10 asset management businesses.”

As on June 30, the AUM of Pramerica MF was Rs 2,125 crore. With the current acquisition, it will reach among the top 15 AMCs, with asset size of Rs 23,000 crore.

Once the transaction with Pramerica's new joint venture with DHFL is complete, the fund house will be renamed DHFL Pramerica Asset Managers, upon regulatory approval. DHFL has a 50 per cent stake in Pramerica MF.

Currently, there are a little over 40 MF entities in India, managing assets worth Rs 13.17 lakh crore.

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First Published: Fri, August 07 2015. 23:50 IST