Foreign fund house JP Morgan Asset Management is believed to be mulling over sale of its India mutual fund business, which manages assets worth over Rs.14,000 crore.
Sources said JP Morgan has begun discussions for a possible sale of its Indian mutual fund arm, although the fund house officially declined to comment on the same. When contacted, a JP Morgan Asset Management spokesperson said, “”As a matter of policy, we don’t comment on speculation or rumours.”
Since December 2013, three international players—Morgan Stanley, ING and PineBridge—have announced selling their mutual fund businesses in the country.
JP Morgan could become the fourth foreign fund house in little over a year to exit the Indian mutual fund industry, although its asset base has grown rapidly in the recent past.
“In my view the problem with foreign or big AMCs is their high cost structure...the slow decision making process and the chase for growth/AUM at the cost of revenue,” Quantum AMC CEO Jimmy Patel said.
The total asset base of Indian mutual fund business crossed Rs.12 trillion last month, although the industry is highly scattered with nearly 45 players with most of them having small businesses. Only four found houses have average AUM of more than Rs.one trillion each and these include HDFC, Reliance, ICICI and Birla Sunlife MFs.
The fund houses have seen robust capital inflows in the recent months, while their asset base has also been getting a major boost from the strong performance of their equity schemes.
JP Morgan received capital markets regulator Sebi’s approval to start MF business in India in February 2007. It had average AUM of Rs.14,123 crore at the end of December 2014.
In September 2014, PineBridge MF announced sale of its schemes to Kotak Mahindra Asset Management, while ING Investment Management India in May last year sold its assets to Birla Sun Life Mutual Fund. In December 2013, Morgan Stanley MF had also announced sale of its mutual fund operations to HDFC MF.