Mumbai, June 13: HDFC Mutual Fund’s promoters — Housing Development Finance Corporation and UK insurer Standard Life — have decided to recapitalise the joint venture mutual fund by raising the paid-up capital to around Rs 100 crore from the present Rs 20 crore through a rights issue. This infusion of capital is aimed at enabling HDFC AMC to acquire Zurich AMC.
The board will meet next week to finalise the takeover. The pricing of the deal would be determined by the assets under management of Zurich AMC before the transfer takes place. According to sources, the purchase would be funded partly through equity and partly through cash held by the AMC. The pricing would also depend on the composition of assets: how much of the funds are invested in equity and how much in debt.
A fund manager said that when valuing an AMC, higher weightage is given to equity funds than to debt funds.
Indirectly, a large part of the funding of this acquisition is being done by Standard Life. The UK-based insurer has paid HDFC Rs 34 crore to buy 20 lakh shares in HDFC AMC. This places the valuation of the country’s largest private mutual fund at Rs 340 crore.
Following the transfer, Standard Life has hiked its stake to 49.9% from 39.9% and HDFC’s shareholding has fallen to 50.1%. Bureau Report