New Delhi, July 20: Principal Mutual Fund, a unit of US-based life insurer Principal Financial Group, will spend Rs 20 crore to acquire rival Sun F&C Mutual Fund, an official said.
He said the proposal to acquire and manage the 23 schemes of Sun F&C worth Rs 475 crore has been cleared by Securities and Exchange Board of India (Sebi).
Earlier, Principal had said it would file the proposal to acquire and manage the schemes of Sun F&C Mutual Fund with Sebi for approval.
“We have got the clearance from Sebi,” said the official who did not wish to be named.
“The acquisition would help us consolidate our position in the domestic mutual fund industry,” he added.
Principal, which began its operations in the country in 2000, has about 1,60,000 investors and manages 20 schemes worth Rs 2,000 crore. On the other hand, the Mumbai-based Sun F&C has more than 70,000 investors.
“We have decided to acquire all the schemes of Sun F&C except the emerging technology fund. It is a single sector fund scheme and we do not have schemes investing in a single sector,” the official said.
“It’s too risky. However, we would give the investors an option to switch over to other schemes,” he added.
Late last month, Principal Financial Group paid about Rs 94 crore to buy out term lender Industrial Development Bank of India’s 50 per cent stake in Principal Asset Management Company, which runs the mutual fund.
It also teamed up with state-run Punjab National Bank (PNB) and Vijaya Bank to form PNB Principal Asset Management Company.
Under the plan, the New-Delhi based bank will transfer its wholly-owned mutual fund entity, PNB Mutual Fund, worth around Rs 142 crore to the new venture.
The agreement will provide Principal the advantage to retail its schemes through the bank’s wide network of 4,056 branches.