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IDFC to buy back Natixis’ stake in asset management biz

06 March, 2017

IDFC Financial Holding Company Ltd (IDFC FHCL), a subsidiary of IDFC Ltd, is seeking to increase its stake in its mutual fund business by acquiring the stake held by Paris-based Natixis Global Asset Management for Rs 244.24 crore (around $37 million), the company said in a disclosure.

IDFC FHCL holds around 75% in IDFC Asset Management Company Ltd (IDFC AMC) and IDFC AMC Trustee Company Ltd and seeks to acquire the 25% stake held by Natixis. The AMC had assets under management of Rs 57,998 crore as of 31 December 2016.

As part of a December 2010 agreement, the shareholders would review the partnership at the end of five years, which was subsequently extended. 

Accordingly, IDFC is acquiring the balance stake for cash within March. 

IDFC AMC was incorporated in 1999 and manages funds across debt and equity asset classes. It had a turnover of Rs 325 crore as of 31 March 2016, Rs 278 crore as of 31 March 2015 and Rs 270 crore as of 31 March 2014. 

Natixis would be the latest among global asset management companies to exit the country as domestic players have been enhancing their interest in the market. 

In March 2016, Edelweiss Asset Management Ltd acquired JP Morgan’s Indian mutual fund business in a deal that marked the exit of yet another foreign firm in an intensely competitive sector. The deal included the acquisition of onshore fund schemes managed by JP Morgan Asset Management India Pvt. Ltd and the international fund of funds. 

JP Morgan joined Japan’s Nomura, Germany’s Deutsche Bank and US financial services giants Goldman Sachs and Morgan Stanley in exiting a sector that still has 43 players, according to industry body Association of Mutual Funds of India (AMFI).

In December 2015, 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. Two months earlier, Reliance Capital Ltd said it plans to buy Goldman Sachs’ mutual fund business in India. 

Belgium’s KBC Asset Management sold its stake in Union KBC Mutual Fund, where it held a 49%, in October 2015. Two months earlier, Deutsche Bank said it is exiting its India MF business, selling it to Pramerica.

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

According to AMFI, the average assets under management of the Indian mutual fund industry for October 2016 crossed Rs 16.8 lakh crore. The AUM of the MF industry in the country grew from Rs 3.26 trillion as on 31 March 2007 to Rs 16.30 trillion as on 31 October 2016.

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IDFC to buy back Natixis’ stake in asset management biz

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