Mumbai, Feb. 3: After months of uncertainty regarding its investment in India, the US-based Alliance Capital today said that following a strategic review it has decided to retain its 75 per cent stake in Alliance Capital Asset Management (India) Private Ltd.
“After evaluating all options, Alliance Capital announced that it would retain its ownership interest in the firm and continue to manage and support it as an ongoing asset manager in the Indian marketplace,” the local mutual fund subsidiary said in a press statement.
“We felt that the significant long-term value inherent in our operations would be best realised by remaining committed to the business and supporting its continued growth,” it added.
John D Carifa, president and chief operating officer of Alliance Capital, said: “The strategic review convinced us even more firmly that the growth potential of the dynamic Indian market is simply too substantial to ignore. Likewise, we felt that the significant long-term value inherent in our operations would be best realised by remaining committed to the business and supporting its continued growth.”
Alliance’s decision puts at rest the speculation that HDFC Mutual Fund might acquire the assets of the American fund’s local subsidiary. “They were close to signing a deal,” sources had said. The big question is why did Alliance change its mind.
Reports had also suggested that the local employees of the mutual fund, with some help from venture capital funds, were keen to buy Alliance’s operations in India. Samir Arora, the dynamic chief based in Singapore, was at the forefront of the deal, sources in the industry said.
However, the move came to a naught. Meanwhile, Alliance Mutual Fund saw a rush of redemption from investors as uncertainty mounted regarding its future. Almost Rs 800 crore was shaved off from its corpus as anxious investors redeemed units and Alliance MF’s corpus shrunk by that amount to a region of Rs 2,500-2,600 crore. Alliance Capital Asset Management (India), had assets of Rs 3,371 under management at end-December.
Shares, where Alliance held significant stakes also slipped during the period. However, following Alliance’s clarification today the premier bourses saw shares like Hinduja TMT, Trent, and several bank stocks appreciating significantly.
“In addition, as a global firm with significant investments in emerging market securities, we will continue to look at further investment opportunities in the Indian market for other Alliance Capital investment vehicles and client accounts,” Carifa said.
The local partner in the venture is Ankar Capital India.