Religare Enterprises Ltd will sell its majority stake in the Indian asset management joint venture to its foreign partner Invesco Ltd, as the financial services company controlled by billionaire brothers Malvinder and Shivinder Singh continues to scale back its diversified operations.
Earlier this year, Religare had sold its stake in its life insurance JV. Bennett, Coleman and Co. Ltd, the Indian media conglomerate better known as the Times Group, acquired Religare’s stake in Aegon Religare Life Insurance Co. Ltd while foreign partner Aegon hiked its holding to 49 per cent.
The latest transaction involves Religare selling its entire 51 per cent stake in Religare Invesco Asset Management Company Pvt Ltd to New York-listed Invesco. It didn’t disclose the transaction amount.
Religare Invesco, the 16th-largest domestic asset management firm, had assets under management of Rs 21,593.51 crore (Rs 21,609.9 crore including domestic fund of funds) for the quarter ended September 30, 2015. It operates mutual funds and portfolio management accounts.
Given typical industry valuations, Religare would get somewhere between Rs 700 crore and Rs 1,000 crore in this deal, as per VCCircle estimates.
Saurabh Nanavati, CEO of Religare Invesco, will continue to lead the firm along with his team after the transaction.
Andrew Lo, senior managing director and head of Asia Pacific at Invesco, said that full ownership of the business will help the company deepen its presence in India and enhance its ability to meet client needs across the globe.
Shachindra Nath, group CEO of Religare Enterprises, didn’t give a reason for the stake sale saying only that it is in the best interest of the Indian asset management business.
Religare also manages or is the sponsor of a separate alternative investment platform straddling PE, VC and hedge funds in the country. That apart, it is into investment banking, health insurance, and lending and securities brokerage, among other businesses.
The company's shares were down 1.8 per cent on the Bombay Stock Exchange in morning trade in a strong Mumbai market on Thursday.
This comes as another back-to-back in-bound M&A deal in the domestic asset management business.
Last month, Nippon Life Insurance Company, Japan’s largest life insurer, said it would raise its stake in Reliance Capital Asset Management (RCAM) to 49 per cent from 35 per cent for Rs 1,196 crore ($184 million). Nippon Life would become the co-sponsor in RCAM and the firm would be renamed Reliance Nippon Life Asset Management.
The Japanese insurer had originally picked up a 26 per cent stake each in RCAM and group firm Reliance Life Insurance Company for $290 million and $680 million in 2012 and 2011, respectively.
RCAM itself struck a deal last month to buy Goldman Sachs Asset Management’s (GSAM) onshore business in India for Rs 243 crore ($37.5 million). The deal will see RCAM take over all onshore mutual fund schemes, including exchange-traded funds, of GSAM India.