RCAM to acquire Goldman Sachs’ India mutual fund for Rs243 cr

21 Oct 2015


Anil Ambani group company Reliance Capital Asset Management (RCAM) today announced the acquisition of the mutual fund business of banking and financial services major Goldman Sachs in India, for Rs243 crore, in an all-cash deal.

The deal comes after Japan's Nippon Life acquired a 14-per cent additional stake in RCAM for Rs1,196 crore, raising its stake in the asset management company from 35 per cent to 49 per cent.

RCAM will acquire all 12 onshore mutual fund schemes of Goldman Sachs Asset Management in India with total assets under management of Rs7,132 crore, which would also make Reliance MF the exclusive fund manager for the government's Central Public Sector Enterprises (CPSE) Exchange Traded Fund.

The transaction has been approved by the boards of the two companies and is expected to be completed in the current fiscal, RCAM's parent firm Reliance Capital said in a statement.

Reliance Capital is the financial services arm of Anil Dhirubhai Ambani group led by Anil Ambani, the younger brother of Mukesh Ambani.

Goldman Sachs has the mandate to manage the CPSE ETF through which the government has so far raised Rs4,000 crore by selling part of its stake in ten central PSUs as part of its disinvestment programme.

Besides further consolidating the position of RCAM, already the largest asset manager in India with asets under mangement of Rs2,50,000 crore, with assets under management including mutual funds, pension funds, managed accounts and offshore funds, the deal also marks yet another exit by a foreign player from the Rs13,00,000 crore Indian mutual fund industry.

Goldman Sachs had entered the Indian mutual fund industry with the acquisition of Benchmark Mutual Fund for Rs120 crore in 2011.

In the last few years, a number of global players have exited the Indian mutual fund business.

Standard Chartered had sold its mutual fund business in India to IDFC in 2008, Fidelity had sold its mutual fund to L&T Finance in 2012, while Morgan Stanley had, last year, sold its mutual fund business in India to HDFC MF.

Besides, Birla Sunlife has acquired ING Mutual Fund, Kotak MF has bought PineBridge Mutual Fund and Pramerica has taken over Deutsche Bank's mutual fund business in India.

Still, there are more than 40 fund houses in the country with total AUM of over Rs13,300,000 crore, which has been growing for eight consecutive quarters now.

In terms of mutual fund AUM, HDFC MF is the largest (Rs171,000 crore), followed by ICICI Prudential (Rs165,000 crore) and Reliance MF (Rs1,53,000 crore) at the second and third places, respectively.

HDFC MF was also in the race to acquire Goldman Sachs' India mutual fund assets, but lost out. The deal will help Reliance MF close the gap on its two bigger rivals.

Globally, Goldman Sachs Asset Management is one of the biggest fund managers with AUM of over $1.19 trillion across countries and asset classes.

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