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HDFC buys Morgan schemes

Mumbai, Dec. 23: HDFC Mutual Fund will acquire all the eight schemes of Morgan Stanley Mutual Fund in the country.

The average combined assets under management (AUM) of these schemes stood at Rs 3,290 crore for the quarter ended September 30.

While the agreement is subject to regulatory approvals, Milind Barve, managing director of HDFC Asset Management Company Ltd, said the acquisition would strengthen HDFC Mutual Fund as it would bring into its fold strong performing domestic mutual fund schemes.

“It is another step towards expanding our mutual fund customer base,’’ he added.

Though HDFC Mutual Fund did not disclose the consideration paid, it is understood to be upwards of Rs 160 crore.

Such acquisitions are not new to the domestic industry that has now 47 fund houses. Last year, L&T Finance bought Fidelity’s mutual fund business. Similarly, in June this year, SBI Mutual Fund (SBI MF) announced that it would acquire all of the existing India domiciled schemes of Daiwa Mutual Fund (Daiwa MF).

HDFC Mutual Fund has an AUM of above Rs 1 lakh crore.

In 1993, the Securities and Exchange Board of India (Sebi) had allowed Morgan Stanley to launch a mutual fund in the country. The first scheme was launched in 1994.

Industry circles said the consolidation also reflected the challenging conditions in the industry. Since the market regulator did away with upfront commissions in 2009 the sector has seen sales being hit, particularly at the retail end. In fact, equity mutual fund schemes have seen heavy outflows.

Though data for November showed that mutual funds witnessed net inflows as compared with outflows in the previous two months, experts said that it was too early to ascertain whether this would be sustained.

Mutual funds have lost over 20 lakh investors, measured in terms of individual accounts or folios, in the first seven months of the current fiscal. Folios are numbers designated to individual investors, though one investor can have multiple folios

November saw mutual funds posting their second consecutive month of rise, recording a 7 per cent growth in average AUMs to Rs 8.90 lakh crore. This was on the back of inflows into liquid funds, which are volatile.

The total AUM of mutual funds was placed at Rs 7.01 lakh crore as on March 31.

SEBI Chairman U K Sinha has been calling for consolidation in the asset management industry due to presence of some non-serious players.

DEAL DETAILS

• HDFC Mutual Fund to acquire all eight schemes of Morgan Stanley Mutual Fund in India

• Average combined assets under management of these schemes are Rs 3,290 crore (quarter ended Sept. 30, 2013)

• HDFC has AUM of above Rs 1 lakh crore

• Agreement is subject to regulatory approvals

 
 
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