Indian Economy News

Reliance MF buys Goldman Sachs AMC for Rs 243 cr

Mumbai: Anil Ambani led Reliance Mutual Fund has agreed to acquire the US-based Goldman Sachs domestic asset management business for Rs 243 crore. The deal is valued at 3.4 per cent of Goldman Sachs’ asset under management (AUM).

Goldman Sachs is an exchange traded fund (ETF) focused asset manager with total AUM of Rs 7,132 crore at the end of September quarter.  Nearly a fourth of its assets are under the government’s Central Public Sector Enterprises (CPSE) ETF, which is exclusive managed by Goldman Sachs.  Excluding the CPSE ETF, the deal works out to nearly 5 per cent of Goldman Sach’s AUM.

Typically, equity assets have been valued between 3 and 5 per cent, while debt assets are valued at around 1 per cent in recent merger and acquisition activity in the over Rs 12-lakh-crore domestic asset management industry.

Goldman Sachs is the fifth foreign asset management company (AMC) to exit India in since 2012.

“Reliance Capital Asset Management (RCAM), a part of Anil Ambani led Reliance Capital, today signed definitive agreements to acquire Goldman Sachs Asset Management’s (GSAM) onshore business in India…The boards of both the companies – Reliance Capital Asset Management and Goldman Sachs Asset Management India – have already approved the transaction. The transaction is expected to be completed by the end of this fiscal year, subject to necessary regulatory approvals,” Reliance Capital said in a release.

Japan’s Nippon-backed RCAM is the subsidiary of Reliance Capital, which is a listed company. Shares of Reliance Capital were last trading 2.22 per cent higher at Rs 408.  Besides mutual fund assets, RCAM also manages pension and offshore money and had AUM of Rs 254,517 crore as on September 30, 2015.

RCAM’s average mutual fund AUM stood at Rs 153,884 crore for the September 2015 quarter, data by industry body Amfi showed.

Reliance MF is currently the third-biggest AMC in the country in terms of asset size, behind HDFC MF and ICICI Prudential AMC. The Goldman Sachs deal will help the Reliance MF narrow the gap with the two leading players.  Reliance MF lags HDFC MF by around Rs 17,254 crore and ICICI Prudential AMC by Rs 10,825 crore. Goldman Sachs deal will add another Rs 7,100 crore to Reliance MF’s assets.

“The transaction will add over half a percent in our market share...Going forward we would be willing to consider more such acquisitions that add to our strength and complement our portfolio”, Sundeep Sikka, CEO, Reliance Capital Asset Management.

“We feel this business is best positioned to achieve long-term success under the direction of an asset manager with an established onshore franchise. We are deeply encouraged by the growing investor demand and government support for the burgeoning Indian ETF industry”, said Sanjiv Shah, co-chief executive officer, Goldman Sachs AMC India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.