New Delhi: Edelweiss Financial Services Ltd has agreed to acquire Ambit Investment Advisors’ flagship hedge fund Ambit Alpha Fund with an AUM of over Rs.1,100 crore, as per a statement. The deal size was not disclosed.
With the transaction, which is subject to due diligence and requisite regulatory approvals, Edelweiss will be its new investment manager.
This is the second asset management acquisition by Edelweiss Group in the recent past.
Earlier in March, Edelweiss announced the acquisition of global giant JP Morgan’s onshore mutual fund business in India with assets worth over Rs.7,000 crore.
The acquisition of Ambit Alpha Fund is expected to further bolster Edelweiss Group’s Rs.35,000 crore Global Assets Management (GAM) business which includes the Group’s existing mutual funds, alternative assets management, multi-strategy funds and asset reconstruction.
Over the last year, this business has witnessed a growth of over 40%.
“We have decided to divest Ambit Alpha Fund, and believe that the interest of the investors will be best served under a larger and well established asset management platform,” said Ashok Wadhwa, Group chief executive officer, Ambit.
Venkat Ramaswamy, executive director and co-head, Edelweiss Global Asset Management, further said, “Ambit Alpha Fund is complementary to our bouquet of offerings in the alternative investment fund business. Forefront (Edelweiss Multi Strategy Funds) that we acquired in 2014 has since grown over 10x, and has one of the best performing funds in this category.”
The past few years have seen a number of major global players exiting their Indian mutual fund business.
For instance, global giant Goldman Sachs last year inked a pact to divest its mutual fund business to Reliance Capital Asset Management for around Rs.243 crore in an all-cash deal.
In 2013, Morgan Stanley, the first global fund to launch a mutual fund in India in 1994, offloaded its fund business in the country to HDFC Mutual Fund.
Prior to that, Fidelity sold its mutual fund to L&T Finance—a unit of L&T Finance Holdings—in 2012 and in 2008, Standard Chartered sold its mutual fund business in India to Infrastructure Development Finance Corporation (IDFC).
Besides, ING Mutual Fund business was bought by Birla Sunlife; PineBridge MF was acquired by Kotak MF and Pramerica MF has bought out Deutsche Bank’s mutual fund business.
“We are seeing the financial savings of Indian investors shifting from hard assets like gold and real estate to financial instruments…Ambit Alpha Fund is one of the market leading Alternate Investment Funds in the country and allows us to consolidate our market position in this business” said Rashesh Shah, chairman & CEO, Edelweiss Group.
Ambit Alpha Fund, the largest category III Alternative Investment Fund (AIF) in India, was launched with an AUM of Rs20 crore in June 2013 raised from Ambit Holdings and a few HNIs.
Ambit Investment Advisors is a joint venture between Ambit Corporate Finance Pvt. Ltd and Nikko Asset Management Co. Ltd of Japan, which is one of Asia’s leading asset managers, with approximately $160 billion in AUM.
This is the second fund under Ambit Investment. It also advises Mauritius-based Ambit Frontier Fund which is an India-dedicated offshore long-short equity hedge fund.
Edelweiss has an asset base of over Rs.33,000 crore with revenue of Rs.5,316 crore and net profit of Rs.414 crore for financial year 2015-16. The group has sizeable presence in large retail segment through its businesses such as Life insurance, housing finance, mutual fund and retail financial markets.
Meanwhile, Edelweiss is also looking to launch a distressed asset fund with a corpus ranging between $750 million and $1 billion, joining a raft of potential investors in troubled corporate assets that are up for sale.