Infrastructure Development Finance Co (IDFC) is selling a 25% stake in its asset management arm to Natixis Global Asset Management, a French fund manager with $719 billion under management.
The deal would help IDFC Asset Management Company (IDFC AMC) expand its distribution to international markets. The deal also includes Natixis Global Asset Management, a 100% subsidiary of French corporate and investment bank Natixis, buying a 25% stake in the trustee company of the AMC.
While the deal size and valuation was not disclosed, but the stake is learned to have been sold for Rs 300 crore valuing IDFC AMC at Rs 1,200 crore. This will be at 6% of the assets under management of Rs 19,946 crore as September 30 '10. This is at a premium to what IDFC paid to acquire the mutual fund business from Standard Chartered for Rs 831 crore at 5.7% of the assets.
Natixis Global Asset Management is one of the 15 largest asset managers in the world based on assets under management. The deal would help it participate in the Indian equity markets. Natixis has a presence in other Asian markets like Japan, China, Singapore and Taiwan.
Several international asset management management firms have picked up stakes in domestic fund management companies since 2007. While deals in late 2007 and early 2008 were done at a high premium, the valuations have significantly slipped. In December 2007, Reliance Capital sold about 5% of its fund unit for Rs 500 crore, valuing India’s largest fund firm at 13% of total assets. JM Financial Mutual Fund, the asset management arm of Nimesh Kampani-promoted JM Financial, sold 12% stake to three hedge fund investors for $26.5 million in July 2008.
But recent deals, like hedge fund T Rowe Price acquiring a 26% stake in UTI Asset Management Co Ltd for Rs 650 crore was done at a relatively lower valuation. This deal was done at 3.2% of assets under management last year. Nomura Asset Management Co. Ltd picked up a 35% stake in LIC Mutual Fund Asset Management Co. Ltd at 2.4% of its total assets also last year.
Some domestic deals have been done at lower valuations. In November 2008, Religare took over Lotus MF for an undisclosed sum but was believed to be pegged just around 2% of assets under management. L&T Finance acquired the asset management business of Cholamandalam DBS Finance Ltd for 1.5% of the assets of the fund last year.