sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Mergers and Acquisitions »
 Deals Of The Day-Mergers And Acquisitions June 12, 2018
 Competition Commission of India may suggest structural changes in Walmart-Flipkart deal
 What you need to know about the Government’s new M&A rules for SMEs
 The Secret to a successful M&A valuation
 How Indian IT companies are trying to survive as outsourcing business declines
 How Indian IT companies are trying to survive as outsourcing business declines
 Times Group MD against further acquisition in telecom sector; fears it will limit consumer choice
 Deals Of The Day-Mergers And Acquisitions June 5, 2018
 All that you need to know about Idea-Vodafone merger
 Government is considering merger of 4 public sector banks
 Deals Of The Day-Mergers And Acquisitions May 30, 2018

Mutual funds gear up for mergers and acquisitions
December, 07th 2009

The mutual fund industry is set for a major shake-up with mergers and acquisitions (M&As) gathering momentum. In September, L&T Finance acquired DBS Cholamandalam for Rs 45 crore. And now, Taurus and Religare are on the lookout.

Taurus Mutual Fund, promoted by Gurgaon-based HB group, is looking to add to its fund offerings by acquiring existing schemes from other fund houses. "On an inorganic basis, we are open to buying the schemes, either equity or debt, but we are not interested in the licence as we already have one of our own," said Waqar Naqvi, CEO of Taurus Mutual Fund.

Resources to augment this equity offering through acquisition are available internally, said Naqvi. Buying of schemes and not the licence is not new in India. In 2005, Birla Sun Life had acquired the schemes of Alliance Mutual Fund and a year earlier, CanBank Mutual Fund had taken over the schemes of GIC Mutual Fund.

Religare Mutual Fund is another asset management company (AMC) looking at inorganic growth."We are looking at opportunities globally to acquire an asset management business. Locally, the industry is feeling the pinch post the no-entry load regime because of increased outflows in the last few months and paying distributors upfront from the AMC's own capital. Therefore, there will be consolidation in the AMC industry in India, too," said Saurabh Nanavati, CEO of Religare Mutual Fund.

Religare AMC recorded operational breakeven in June, as reflected in Religare Enterprises' segment-wise results for the September quarter. The AMC can thus bank on its well-capitalised position and free cash-flow for future acquisitions, Nanavati said.

Religare Enterprises is promoted by Shivinder Mohan Singh and Malvinder Mohan Singh, the erstwhile promoters of Ranbaxy Laboratories, which was sold to Daiichi Sankyo of Japan. The AMC had earlier acquired Lotus Mutual Fund in 2008.

The onset of the no-entry load regime has pushed up costs for the AMCs, which now have to fork out money from their own pocket to distributors. Earlier, they were collected from investors but the Securities and Exchange Board of India stopped the practice with effect from August 1.

Faced with rising costs, many AMCs, which are inadequately capitalised to deal with the situation, are now looking to sell out while others are looking to use the opportunity to grow their businesses.

Economy of scale is another reason for consolidation. The larger a business is, the more cost-effective it can be, say industry experts. According to them, five years ago, an AUM of Rs 3,000 crore was sufficient to achieve breakeven; today that level has gone up to Rs 10,000 crore.

"I would not be surprised if there is a fair amount of consolidation in the industry. The commitment to the business and the ability to navigate through India's shifting investing environment would be key factors in determining who would remain in the business," said Sanjay Sachdev, country manager for Shinsei Corporate Advisory Services.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions