Mumbai, July 1: Within a week of buying out IDBI in a joint venture, the Principal Mutual Fund today announced the takeover of Sun F&C Mutual Fund in India.
A 100 per cent subsidiary of the US’ Principal Financial Group, the company said the acquisition will consolidate its position in the Indian mutual fund industry.
Principal MF will get about Rs 500 crore of assets being managed by Sun F&C, and over 70,000 investors. This will be in addition to Principal Mutual Fund’s existing investor base of 1.8 lakh investors, along with Rs 2,000 crore entrusted to it by unit-holders.
“This transaction will help us serve the interests of our unit holders and to maintain continuity of their investments,” Nikhil Khatau, CEO of Sun F&C Mutual Fund said.
Principal has been spreading its distribution network after it snapped up IDBI’s stake in a joint venture. This month, it entered into a pact with Punjab National Bank and Vijaya Bank to focus on long-term mutual funds and related financial services in India.
Sun F&C, which began operations in India in March 1995, was one of the first private sector (predominantly foreign) mutual funds to be awarded a licence.
The consolidation of the Indian mutual fund industry is gathering pace as companies realise that creating an infrastructure for marketing and distribution is an expensive proposition. Sebi is unhappy with several funds that focus on high net-worth clients for business at the expense of small investors.
Sun F&C is believed to be one of the funds with a small investor base. Sebi is keen to spread the equity cult through mutual funds that bring in a larger pool of investors. It has called a meeting this month in an attempt to push them towards expanding their retail clientele.
“The Principal Financial Group has demonstrated its commitment and expertise to Indian investors by offering innovative financial products and services with unique approaches to distribution,” said Sanjay Sachdev, country manager of the Principal Financial Group.