Deutsche Bank Group has entered into an agreement to divest its India asset management business to Pramerica Asset Managers Pvt Ltd (Pramerica AMC), for an undisclosed amount.
Pramerica AMC, in which Dewan Housing Finance Corporation Ltd (DHFL) is picking 50 per cent stake, will get a big boost in terms of assets under management (AUM) with this transaction.
Established in 2003 in India, Deutsche Asset Management (India) is the second-largest wholly foreign owned mutual fund asset manager in India, behind Franklin Templeton and the 15th largest among all mutual fund managers (not including fund of funds). As of June 30, 2015, it had Rs 20,720 crore average AUM.
Pramerica AMC in contrast had AUM of just Rs 2,124 crore. The deal will catapult it from 32 to 13th largest mutual fund house.
Although the deal value stands undisclosed, given the average size of deals in the industry based on AUM, it could be Rs 500-1,000 crore ($80-160 million).
Headquartered in Mumbai, Pramerica AMC has a presence in 19 cities across the country including branches in Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Pune. It was founded in 2007.
“The divestment of our asset management business is in line with our strategy of focusing on our core businesses where we can achieve a leadership position. Deutsche Bank Group’s overall India franchise has posted strong financial results, and we remain absolutely committed to further investment and development of our business here given that India is strategically important to the bank’s global growth aspirations," said Ravneet Gill, CEO, Deutsche Bank Group India.
Pramerica AMC is soon to be renamed as DHFL Pramerica Asset Managers after the completion of the deal.
"When the transaction is completed, we will have the scale and platform necessary to make our investment strategies available to clients across India and put us within sight of the top 10 asset management businesses. We are confident that the combined business, and our new joint venture with DHFL, will enable us to achieve our strategic priority of building an industry-leading India asset management business," said Glen Baptist, CEO of Pramerica International Investments.
Last October, DHFL had inked a deal to form an asset management joint venture (JV) with US-based Prudential Financial Inc (PFI) in India by acquiring 50 per cent in its existing wholly owned mutual fund business in the country.
As per the JV agreement, DHFL will acquire 50 per cent stake in Pramerica AMC, PFI's asset management arm in India. It will also acquire 50 per cent stake in Pramerica Trustees, the trustee for the mutual fund unit. The twin deal is for cash worth Rs 24.49 crore ($4 million). The deal is expected to be executed next week.
PFI, a global financial services company with more than $1 trillion of assets under management provides life insurance, annuities, retirement-related services, mutual funds and investment management services. It does business under the trade name Pramerica and has operations in the US, Asia, Europe and Latin America.
PFI is separate from Prudential UK, which has a separate insurance and asset management JV with ICICI.
In 2013, DHFL and PFI joined hands to create a life insurance JV named DHFL Pramerica Life Insurance Company. DLF Ltd, the largest real estate player by market capitalisation, had sold its 74 per cent stake in DLF Pramerica Life Insurance Company to DHFL, in which DHFL picked 50 per cent stake; the remaining 24 per cent was held by promoter group entities.
