June 2010
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BNP to exit Sundaram MF, SFL to acquire BNP stake in AMC, Trustee co

French Bank BNP Paribas SA is exiting from the mutual fund venture of Sundaram Finance (SFL). SFL board on Wednesday decided to acquire the 49.90 per cent stake of BNP Paribas asset management (BNP PAM) both in Sundaram BNP Paribas Asset management company and Sundaram BNP Paribas Trustee company.

This is subject to necessary agreements and regulatory approvals. The two companies will become 100 per cent subsidiaries of SFL. Company officials declined to disclose the deal size citing confidential clause. This is the second time, Sundaram has bought out its MF partner. Earlier, the first partner Newton had exited Sundaram AMC.

The latest deal is sequel to BNP Paribas SA (parent of BNP PAM), as part of part of a global acquisition, taking over the banking and financial services activities of the Fortis Group.

This led to BNP indirectly acquiring interests in Fortis Investment Management (India) and Fortis trustee (India), the asset management and trustee company respectively of Fortis mutual fund in India.

In view of this, SFL and BNP PAM have amicably decided to proceed with the disengagement from their joint ventures in Sundaram BNP AMC and Sundaram BNP TC.

There will be no impact on the other three Joint Ventures namely, Sundaram BNP Paribas Home Finance. (SFL Group holding 51 per cent), Sundaram BNP Paribas Fund Services, (SFL Group holding 51 per cent) and BNP Paribas Sundaram Global Securities Operations (SFL Group Holding 49 per cent).

The partners intend to further strengthen their relationship and ensure sustained growth of these joint ventures.
Since it commenced business in 1996, Sundaram MF has come out with a bouquet of 125 equity and fixed income schemes catering to investor preferences.

As on March 31, 2010, it had average assets under management of Rs 13,878 crore and a customer base of 2.33 million. In 2009-10, the AMC reported income from operations of Rs 110.10 crore and a net profit of Rs 20.83 crore SFL investment in the AMC is Rs 12.09 crore and in the trustee company Rs 2.51 lakhs.

Earlier this year, market regulator, the Securities and Exchange Board of India (Sebi) asked BNP to limit its exposure to the Indian mutual fund industry through a single entity.

BNP Paribas had bought a stake in Sundaram Finance’s mutual fund in 2005. But, last year, Fortis Mutual Fund came under the French bank’s umbrella after it acquired Belgium-based Fortis Bank’s various international operations, including the domestic mutual fund business.

As rules do not allow one firm to own stakes in more than one AMC, the market regulator Sebi set a deadline of March 31 for BNP to decide on how it wanted to operate in India’s 36 member-strong mutual fund industry.

Source: Economic Times

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