SBI sells 37% in MF to SocGen for $35 mn

The State Bank of India (SBI) today announced the sale of its 37 per cent stake in its mutual fund arm, SBI Fund Management, to Societe Generale Asset Management (SGAM) for over $35 million. SBI will continue to hold the remaining 63 per cent stake.

SBI Managing Director Chandan Bhattacharya signed the memorandum of understanding (MoU) with SGAM's Director of International Development Christian d'Allest today. "SBI is open to similar equity tie-ups for its merchant banking and factoring businesses," SBI Chairman A K Purwar said.

SBI will now approach the central government, Foreign Investment Promotion Board (FIPB), Reserve Bank of India (RBI) and Securities Exchange Board of India (Sebi) for approvals, which are expected to come in two months.

This is the second instance of a foreign partner being roped in the public sector mutual fund industry. The first one to do so was Principal, which holds a 51 per cent stake in an asset management company promoted by Industrial Development Bank of India. Subsequently, two state-run banks "" Punjab National Bank and Vijaya Bank "" replaced IDBI there.

"With the joint venture, we plan to regain market share, which has dropped from 3.73 per cent in 2003-04 to 3.51 per cent in June this year. The entire business budget for the current year and the next two years will have to be reworked," Bhattacharya said. Currently, SBI Mutual Fund's assets under management are around Rs 5,600 crore.

The company plans to increase these to Rs 10,000 crore in the current financial year.

Purwar said SGAM would get proportional representation on the SBI Mutual Fund board, which could be two berths. In addition to this, two executives from SGAM will be deputed at SBI Mutual Fund to impart training.