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JM to sell stake to Valiant Capital , Blue Ridge and Eton Park

JM Financial Ltd said on Friday it will sell a 12 percent stake in its fund unit, JM Financial Asset Management, to raise 1.12 billion rupees to fund expansion.

“We want to increase our distribution muscle across India and that requires capital,” Vishal Kampani, director of the fund house, told Reuters in an e-mail.

“We want to maintain a 25-30 percent plus growth in the AUM over the medium term,” he said, adding he was not looking at raising more capital for at least two years as the business plan was funded.

The fund house has seen average assets surge more than 200 percent to 116.55 billion rupees in the last one year, far higher than the 38.1 percent growth of the industry, according to data from the Association of Mutual Funds in India.

JM will sell 4 percent each to Valiant Capital Partners, Blue Ridge Capital and Eton Park, it said in a statement.

The proposed deal values the firm at 7.32 percent of its assets, one of the highest in the industry in two years.

In March, Standard Chartered sold its Indian asset management business to Infrastructure Development Finance Co for $205 million, valuing the firm at about 6 percent of its assets under management.

In December, Reliance Capital  said Eton Park would buy about 5 percent of its fund unit for 5 billion rupees, valuing India's largest fund firm at 13 percent of total assets. 

India's 5.2 trillion rupees fund industry, rated one of the fastest-growing in the world by McKinsey, saw assets surge nearly 70 percent in 2007, attracting global players such as American International Group  and JP Morgan.

The industry is forecast to quadruple assets to $520 billion by 2015 by Boston Consulting Group, a potential that is boosting valuations.

Indian fund management firms are expensive by global standards though. Asset management firms Blackrock and Legg Mason are quoting at less than 2 percent of their assets under management.

Source: Reuters

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