Religare-Aegon AMC may break up over Lotus acquisition

Mumbai: Religare Enterprises Ltd is likely to end its asset management joint venture with Dutch financial services major Aegon, although the two may carry on with their life insurance venture Relegare Aegon Life Insurance.

The Relegare-Aegon AMC tottered after Religare agreed to buy Lotus India Asset Management Company Pvt Ltd, earlier this month, industry sources pointed out.

Religare Enterprises earlier this month announced it was acquiring 100 per cent of Lotus Mutual Fund, in the midst of a liquidity crisis in the mutual fund industry. The deal is awaiting regulatory approvals.

While the valuation of the deal was not yet known, analysts termed the deal as a 'bargain buy' in the current market conditions and said it would give the 50-50 JV between Religare and Aegon a headstart of about two years in the mutual fund market.

Lotus India AMC is a joint venture between Fullerton Fund Management Group, a unit of Singapore's Temasek, and London-based Sabre Capital Worldwide.

Lotus India has more than Rs5,000 crore ($1 billion) of funds under management.

Religare is controlled by Ranbaxy Laboratories promoters, the Singh family, who recently sold their stake in the drug major Japan's Daiichi Sankyo.

Liquidity crunch and mounting losses are likely to be the reason for the foreign partner to consider exiting from the venture, industry sources said. Religare is unlikely to reconsider the acquisition of Lotus as the valuation has been too low and the deal extends Relegare's market presence.