New Delhi: After life insurance, financial services group Religare Enterprises has decided to exit mutual fund business with sale of its controlling 51 percent stake in Religare Invesco AMC to the foreign partner Invesco.


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While a number of foreign fund houses have exited the Indian mutual fund industry -- the latest being Goldman Sachs -- there have not been many cases where Indian entities have sold the asset management business.


Earlier this year, Religare had sold its stake in its life insurance join venture. In May 2015, Religare had announced that it will exit Aegon Religare Life Insurance Company by selling its stake to existing partner Bennett, Coleman and Company Ltd (BCCL) of the Netherlands.


Religare did not disclose the exact reasons for the sale of mutual fund business but sources said that the capital is being unlocked through mutual fund. The funds through stake sale will be used for health insurance and lending platform.


The shares of Religare reacted negatively to the announcement and settled down at 2.04 percent on the BSE in a strong broader market today.


While the Indian mutual fund industry has been growing steadily, Religare Invesco has not seen any major upsurge in its asset under management in the recent past.


Its average assets under management (AUM) stood at Rs 21,593 crore for the quarter ended September, only marginally higher than Rs 21,009 crore as on March 31 this year. In between, it had fallen to Rs 19,518 crore in the quarter ended June.


Without disclosing the deal size, Religare said in a statement that it has entered into a definitive agreement under which Invesco would increase its stake to 100 percent in the joint venture. The transaction is subject to regulatory approvals.


Religare held 51 percent in the JV while Invesco currently has 49 percent ownership.


Invesco's Senior Managing Director and Head of Asia Pacific Andrew Lo said it would further deepen its presence in India by taking full ownership of this business.


Religare Group CEO Shachindra Nath termed Invesco's decision as "an endorsement of the Indian macros" and also of the overall quality of the management team.


Saurabh Nanavati will continue as CEO, along with the existing senior management team of the fund house.


Invesco had purchased 49 percent stake in March 2013, wherein it was also given an option to further increase its stake before March 2016.


In the recent past, a number of foreign fund houses have exited the Indian mutual fund market, but in most of those cases, the businesses were acquired by Indian entities. The latest deal, therefore, goes against the prevailing trend.