Edelweiss to buy JP Morgan’s India mutual fund business

Edelweiss Asset Management Ltd has agreed to acquire JP Morgan’s Indian mutual fund business in a deal that marks the exit of yet another foreign firm in an intensely competitive sector.

The deal includes the acquisition of onshore fund schemes managed by JP Morgan Asset Management India Pvt Ltd and the international fund of funds, Edelweiss said in a statement. It didn’t disclose financial details of the deal.

The acquisition, which is subject to regulatory approvals, will catapult the mutual fund business of Edelweiss. JP Morgan, which entered the Indian MF industry in 2007, had average assets under management of Rs 7,081 crore for the three months through December 2015 compared with Rs 1,676 crore for Edelweiss.

Edelweiss said it is “committed to absorbing majority of employees” of the target company. It didn’t elaborate.

The acquisition will strengthen Edelweiss Group's Rs 31,000 crore asset management businesses that comprises its mutual fund business, credit alternative funds, offshore funds and equity funds, the statement said.

“There will be planned investments into the business in terms of products, technology, distribution and a clear strategy to compound growth,” said Rashesh Shah, chairman and CEO of Edelweiss Group.

JP Morgan joins Japan’s Nomura, Germany’s Deutsche Bank and US financial services giants Goldman Sachs and Morgan Stanley in exiting a sector that still has 44 players, according to the industry group Association of Mutual Funds in India.

In December, Nomura Asset Management Co Ltd agreed to sell more than half its stake in its mutual fund joint venture with Life Insurance Corporation and the state-run firm's mortgage lending arm. In October, Reliance Capital Ltd announced plans to buy Goldman Sachs's mutual fund business in India.

Belgium's KBC Asset Management had sold its stake in Union KBC Mutual Fund, where it held a 49 per cent stake, in October. In August, Deutsche Bank announced exiting its India MF business, selling it to Pramerica.

In 2014, Morgan Stanley, ING and PineBridge had exited India's MF industry. Earlier, Standard Chartered divested its mutual fund business in India to IDFC in 2008 while Fidelity sold its mutual fund arm to L&T Finance in 2012.

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