Fidelity Worldwide Investment, the world’s second money manager, is selling its Indian business to a unit of the country’s biggest engineering company seven years after entering India’s $135 billion mutual fund market.
L&T Mutual Fund’s second purchase in three years will help the company almost triple its assets to 134.96 billion rupees, data compiled by Bloomberg show. The industry manages a total 6.87 trillion rupees in stocks and bonds, according to the data.
“The purchase catapults L&T Mutual into the top league in rankings because of Fidelity’s large equity assets,” Dhirendra Kumar, managing director at Value Research, a firm that tracks funds, said by phone from New Delhi. “L&T was struggling to find fund managers. The sale works for Fidelity as it would have to shell out a substantial chunk if it had to pay severance to employees.”
The sale comes two months after billionaire Anil Ambani’s Reliance Capital Ltd. (RCAPT) sold a stake in its fund management unit to Nippon Life Insurance Co. Nippon Life paid about 22 billion yen ($287 million) for 26 percent of India’s second-largest money manager, valuing it at 6.6 percent of its 843 billion rupees of assets, according to data compiled by Bloomberg.
Mutual-fund assets in India have dropped 15 percent since peaking in November 2009, after the country banned firms from charging investors a fee at the time of purchase, according to AMFI. The restriction caused distributors, which previously shared the fee with the manager, to reduce marketing.
T. Rowe Price Group Inc. bought a 26 percent stake in UTI Asset Management Co. in 2009 that valued India’s oldest money manager at 3.3 percent of its money under management. L&T Asset acquired DBS Cholamandalam Asset Management that same year for 450 million rupees, or 1.6 percent of the managed assets.
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