Mumbai, March 22: Edelweiss Asset Management today announced the acquisition of bigger rival JP Morgan's mutual fund business in India, which has assets worth over Rs 7,000 crore, making the American fund house the tenth foreign major to exit the over Rs 13 lakh-crore industry in the last eight years.
Though the companies did not reveal the deal size, market sources said the Wall Street major netted around Rs 110 crore from the deal.
Edelweiss today said it had executed an agreement to acquire all onshore fund schemes managed by JP Morgan AMC India, including country-based onshore mutual fund business and the international fund of funds.
Following the acquisition, the assets under management (AUM) of the combined entity will be around Rs 8,757 crore. A press statement from Edelweiss said it would also absorb the majority of employees of JP Morgan.
Last year, the American fund house restricted redemptions from two of its fixed income schemes because of their exposure to debentures issued by troubled Amtek Auto. It later segregated the illiquid asset from other investments and sold the debentures to a private equity firm.
Today's development marks the exit of another foreign fund house from the highly competitive domestic mutual fund industry.
Last year, Pramerica agreed to buy the asset management business of Deutsche Bank in India. Reliance Capital Asset Management, part of the Anil Ambani group, acquired Goldman Sachs' mutual fund business in India for a consideration of Rs 243 crore in an all-cash transaction.
"Edelweiss Group continues to remain focused on the India growth story and making inroads into the retail space by leveraging our well-diversified platform. Given the complementary business advantages and the significant business that JP Morgan Asset Management India has built, this acquisition is a natural win for both Edelweiss and JP Morgan. There will be planned investments into the business in terms of products, technology, distribution and a clear strategy to compound growth," Rashesh Shah, chairman and CEO of Edelweiss Group, said.
The acquisition is expected to further strengthen Edelweiss Group's Rs 31,000-crore global asset management businesses, which include the existing mutual fund business, credit alternative funds, offshore funds and equity funds.