Nov. 9 (Bloomberg) -- T. Rowe Price Group Inc. bought a 26 percent stake in UTI Asset Management Co., India’s oldest money manager, after assets managed by Indian funds rose fivefold in five years.

State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corp. of India, the four government-controlled companies that each hold 25 percent of UTI Asset, sold equal stakes to T. Rowe Price, Jaideep Bhattacharya, chief marketing officer at UTI Asset, said in a phone interview today.

The purchase gives the Baltimore-based investment company access to a market where assets managed by mutual funds climbed to 7.63 trillion rupees by the end of last month, from 1.48 trillion rupees in October 2004, according to the Association of Mutual Funds of India. India’s benchmark Sensitive Index has rallied 68 percent this year, headed for its best annual performance since 2003.

The deal “is a clear indication of the growing opportunity in the Indian mutual fund industry,” A.P. Kurian, chairman of the Association of Mutual Funds of India, said in a phone interview. “India’s mutual fund industry is one of the fastest growing in the world.”

Punjab National Bank sold a 6.5 percent stake in UTI Asset and shares in UTI Trustee Co. to T. Rowe Price Global Investment Services Ltd. for 1.63 billion rupees ($35 million), according to a statement to the Bombay Stock Exchange. The transaction values the Indian money manager at 25 billion rupees, or 3.3 percent of its assets under management.

Asset Managers

Larsen & Toubro Ltd.’s finance unit in September bought DBS Cholamandalam Asset Management for 450 million rupees, valuing DBS at 1.6 percent of funds managed.

Eton Park Capital Management LP, the hedge-fund firm founded by former Goldman Sachs Group Inc. partner Eric Mindich, in December 2007 bought a stake in Reliance Capital Asset Management Ltd., India’s biggest mutual fund company, valuing the fund manager at about 13 percent of assets under management in 2007.

UTI Asset, with 768.5 billion rupees in assets as of Oct. 31, canceled plans last year to sell 48.5 million shares in July last year, after the Sensex had its worst first half on record. The sale would have made it the first money manager in the country to list its shares on exchanges.

T. Rowe Price managed $366.2 billion worth of assets as of Sept. 30.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net.

Last Updated: November 9, 2009 02:33 EST