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Edelweiss Asset Management has signed an agreement to acquire the onshore fund schemes managed by JP Morgan Asset Management India Pvt Ltd (JPMAM), including its India-based onshore mutual fund business and the international fund of funds.
However, the companies did not disclose the financial details of the deal.
The assets under management (AUM) of JPMAM are around Rs 7,081 crore, while the combined AUMs of both the entities amount to around Rs 8,757 crore. “Along with the schemes, Edelweiss is committed to absorbing majority of employees of JPMAM …” Edelweiss said.
In 2015, JP Morgan AMC was hurt by its exposure to Amtek Auto debentures, on which the automobile components maker had defaulted. The fund house had imposed curbs on redemption in two of its schemes that had exposure to the Amtek Auto paper. Sebi then tightened the norms for investment by debt-oriented mutual fund (MF) plans and introduced caps on how much they can invest in debt issued by an individual company, a business group or to any specific sector.
Several global players have exited Indian mutual fund business in the last couple of years. Reliance MF last year announced takeover of global giant Goldman Sachs’ mutual fund business in India for Rs 243 crore in an all-cash deal.
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Standard Chartered sold mutual fund business in India to IDFC in 2008, Fidelity sold mutual fund to L&T Finance in 2012, while last year HDFC MF acquired Morgan Stanley’s fund business here.
Birla Sunlife had acquired ING Mutual Fund, Kotak MF bought PineBridge Mutual Fund and Pramerica was taken over Deutsche Bank’s MF business in India. There are more than 40 fund houses in the country with a total AUM of over Rs 13 lakh crore.
Rashesh Shah, chairman & CEO, Edelweiss Group, said, “Given the complementary business advantages and the significant business that JPMAM has built, this acquisition is a natural win for both Edelweiss and JP Morgan. There will be planned investments into the business in terms of products, technology, distribution and a clear strategy to compound growth.”
The acquisition will further strengthen Edelweiss group’s Rs 31,000 crore global asset management businesses, which include the group’s existing mutual fund business, credit alternative funds, offshore funds and equity funds.
“We have built a substantial onshore funds business in India over the past decade. As a result of a global strategic review and after careful consideration of what is best for our clients and employees, we have decided to find an acquirer for this business,” said Michael Falcon, CEO of Asia Pacific, Global Investment Management for JP Morgan Asset Management.
