Reliance MF eyes more acquisitions after Goldman Sachs buy

New Delhi: After acquiring Goldman Sachs' India mutual fund business, top fund house Reliance Capital Asset Management (RCAM) is looking for more acquisitions in this highly-fragmented market.

While a number of foreign players have exited the market in recent years, there would be still be 43 fund houses present in the country after Goldman Sachs' exit.

However, there are only five fund houses that have average Asset Under Management (AUM) of more than Rs 1 lakh crore -- namely HDFC MF, ICICI Pru, Reliance MF, Birla Sunlife MF and UTI Mutual Fund.

SBI Mutual Fund, Kotak Mahindra MF, IDFC MF and Franklin Templeton MF are among those with AUMs of over Rs 50,000 crore each, while a number of others have much lower asset bases -- making this Rs 13 lakh crore sector ripe for further consolidation.

A number of fund houses have already tapped this opportunity to strengthen their positions with Reliance MF being the latest with its first ever acquisition.

It announced yesterday the acquisition of global giant Goldman Sachs' all 12 onshore mutual fund schemes for Rs 243 crore in an all-cash deal. These schemes together have AUM of of Rs 7,132 crore and includes the government's ambitious Central Public Sector Enterprises (CPSE) Exchange Traded Fund.

"This acquisition by RCAM is an important first step in our overall strategy to strengthen our businesses through selective inorganic growth. GSAM India has a strong bouquet of schemes and a talented team. We are confident that together they will complement and enhance RCAM's overall offerings to our investors," Reliance Capital's chief Sam Ghosh said.

Reliance Capital is the financial services arm of Anil Ambani-led conglomerate Reliance Group and is also present in insurance, brokerage and wealth management among other areas.

RCAM runs Reliance MF and is the largest asset manager in India with total AUM of over Rs 2.5 lakh crore across mutual funds, pension funds, managed accounts and offshore funds.

Goldman Sachs had entered the Indian mutual fund industry in 2011 with acquisition of Benchmark Mutual Fund for Rs 120 crore. In last few years, a number of global players have exited the Indian mutual fund business.

Standard Chartered sold its mutual fund business in India to IDFC in 2008, Fidelity sold its mutual fund to L&T Finance in 2012, while last year HDFC MF acquired Morgan Stanley's fund business here.

Besides, Birla Sunlife has acquired ING Mutual Fund, Kotak MF has bought PineBridge Mutual Fund and Pramerica has taken over Deutsche Bank's mutual fund business in India.

In terms of mutual fund AUM, HDFC MF is the largest (Rs 1.71 lakh crore), followed by ICICI Prudential (Rs 1.65 lakh crore) and Reliance MF (Rs 1.53 lakh crore).

HDFC MF was also in the race to acquire Goldman Sachs' India mutual fund assets, but lost out and the deal will help Reliance MF close the gap on its two bigger rivals.