Reliance Capital sets sights on JP Morgan's Indian AMC business

According to a published piece in Mint, Reliance Capital Asset Management an ADAG company, is in early talks to acquire the Rs.7501-crore portfolio of JP Morgan Asset Management India as it seeks to gain an edge over its two bigger rivals.

Transaction, if concluded, would make it the second purchase of a foreign fund manager’s portfolio by Reliance Capital, which recently acquired Goldman Sachs Group's mutual fund business in India. Goldman Sachs AMC (Asset Management Company) had a total AUM (Asset Under Management) of Rs 7,132 crore. With Rs.1.57 trillion of assets under management as of 31 December 2015, Reliance Capital Asset Management is India’s third largest AMC, trailing behind only HDFC Mutual Fund (Rs.1.78 trillion), and ICICI Prudential Mutual Fund (Rs.1.72 trillion).

Of late, Reliance AMC has been looking at various acquisition options in order to close the gap on top. A Reliance Capital spokesperson said: “Industry will be seeing greater consolidation and Reliance AMC is open to further acquisitions similar to Goldman AMC. However, we would not like to comment specifically with regards JPM or any company.” DHFL Pramerica Asset Managers Pvt. Ltd; Tata Asset Management Ltd; and other large bank-controlled AMCs are among the others who are keen on buying JP Morgan AMC’s India business, according to the report.

In recent times foreign AMCs have seen pressure due to their fixed income business, namely both Goldman Sachs and JP Morgan.

Asset management companies in India’s Rs.12.62 trillion mutual fund industry have been a hotbed of activities in recent years. A number of Indian AMCs have bought their foreign counterparts. To cite a few examples, DHFL Pramerica MF bought out Deutsche Asset Management India; Birla Sun Life Asset Management bought ING Investment Management; Kotak Mahindra Asset Management purchased the assets of PineBridge Investments Asset Management; HDFC Asset Management acquired Morgan Stanley Investment Management; and SBI Mutual Fund bought out Daiwa Mutual Fund.

If the JP Morgan AMC deal goes through, it will mark the exit of the seventh foreign firm from India’s asset management space.

In another development, Japanese financial major Nippon Life Insurance received all the required regulatory approvals to increase its stake to 49 per cent from existing 35 per cent. With the increase in stake Nippon Life Insurance would become a co-sponsor of Reliance Mutual Fund along with Reliance Capital. Reliance Capital Asset Management will be renamed as Reliance Nippon Life Asset Management Company.

Shares of Reliance Capital were trading flat with negative bias at Rs 366.50 on NSE.