Dewan Housing Finance Corporation Ltd (DHFL) is forming an asset management joint venture (JV) with US-based Prudential Financial Inc (PFI) in India by acquiring 50 per cent in its existing wholly owned mutual fund business in the country, as per a stock market disclosure.
As per the JV agreement, DHFL will acquire 50 per cent stake in Pramerica Asset Managers Pvt Ltd (Pramerica AMC), PFI's asset management arm in India, and the JV will be christened as DHFL Pramerica Asset Managers Pvt Ltd. It will also acquire 50 per cent stake in Pramerica Trustees, the trustee for the mutual fund unit. The twin deal is for cash worth Rs 24.49 crore ($4 million).
PFI, a global financial services company with more than $1 trillion of assets under management as of June 30, 2014, provides life insurance, annuities, retirement-related services, mutual funds and investment management services. It does business under the trade name Pramerica and has operations in the US, Asia, Europe and Latin America.
PFI is separate from Prudential UK, which has a separate insurance and asset management JV with ICICI.
Last year, DHFL and PFI joined hands to create a life insurance JV named DHFL Pramerica Life Insurance Company to serve the life insurance needs of customers in the country.
DLF Ltd, the largest real estate player by market capitalisation, had sold its 74 per cent stake in DLF Pramerica Life Insurance Company to DHFL, in which DHFL picked 50 per cent stake; the remaining 24 per cent was held by promoter group entities.
"Today, I am pleased that DHFL’s relationship with Pramerica is being further strengthened, with the forging of our joint venture partnership in the asset management business. We shall now be able to provide quality asset management products and solutions, specially designed for the low and middle income customers," said Kapil Wadhawan, chairman and MD, DHFL.
"This new venture demonstrates our ongoing commitment to India, and we jointly intend to invest in the business to bring new ideas and solutions to meet the investment needs of our institutional and retail clients across India. DHFL’s distribution network will enhance our ability to offer a broader array of products and services to a wider range of customers and clients," said Glen Baptist, president, Pramerica International Investments.
Headquartered in Mumbai, Pramerica AMC has a presence in 19 cities across the country including branches in Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Pune.
For the quarter ended September 30, it had average assets under management (AUM) of Rs 2,060.21 crore. This means the firm is valued at 2.42 per cent of its AUM. This is at the lower end of the valuation of mutual funds in the country.
Established in 1984, DHFL is now the second largest private housing finance company in India. It offers both housing loans (house purchase, construction, extension and project loan) and non-housing loans (loan against property, lease rental financing and purchase of commercial premises).
Shares of Dewan Housing closed at Rs 354.10 each, down 1.32 per cent on BSE in a strong Mumbai market on Tuesday.
(Edited by Joby Puthuparampil Johnson)