Investments into mutual funds by domestic retail investors have surged as a period of low inflation is pushing individuals to search for alternatives to traditional physical assets such as gold and real estate.
Edelweiss Asset Management Limited (EAML) on Tuesday said it has signed an agreement towards acquiring the global giant JP Morgan's mutual fund business in India that has assets worth over Rs 7,000 crore. This marks another exit of a foreign fund house from the over Rs 13 lakh-crore industry.
The agreement is, however, subject to regulatory approvals, a release from Edelweiss said. The assets under management of JP Morgan Asset Management India (JPMAM) stands at Rs 7,081 crore, while the combined AUMs of both the entities as of December 31, 2015, was approximately Rs 8,757 crore, the release said. EAML will absorb most employees of JP Morgan.
The deal size could not be ascertained immediately.
Investments into mutual funds by domestic retail investors have surged as a period of low inflation is pushing individuals to search for alternatives to traditional physical assets such as gold and real estate.
That is raising expectations of more deals among India's more than 40 asset managers, especially by foreign players looking to exit given the relatively small size of their operations.
"It's the right opportunity, and it gives us critical size," Nitin Jain, CEO of Global Asset and Wealth Management at Edelweiss Group said.
"A lot of retail savings are moving towards the mutual fund space, and that's a big theme we are playing for."
About 35-40% of JP Morgan Asset Management's assets were invested in equities, while the rest was is debt, and the Indian firm will absorb the U.S. firm's around 70-strong team, Jain added.
Mutual funds in India have seen net inflows of Rs 2.07 lakh crore in the current financial year, with Rs 82,252 crore going into equity funds alone.
The fortunes of India's asset management sector have revived since 2014, when stock markets started a powerful rally, ending years of scant retail interest in mutual funds.
India's mutual funds industry has already seen a slew of deals, including Prudential Financial Inc's purchase of Deutsche Asset Management's India unit last year.
—With agencies
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