Mumbai: Axis Asset Management Co, which got regulatory approval last week to start operations, plans to launch up to nine products by March and hopes to breakeven in three years, its chief executive said on Wednesday.
The company, an arm of private-sector lender Axis Bank, aims to start with two money market funds in October, followed by an equity fund, Rajiv Anand said.
The firm is aiming to capture at least a 3% market share in the next five years and secure a place among the top-10 players in the industry, giving it a chance to manage about 700 billion rupees ($14.4 billion) in a rapidly growing industry.
“As things stand, we believe we will breakeven in three years time,” Anand told Reuters in an interview at his Mumbai office. “Captive distribution is going to be the key.”
The chartered accountant said Axis Bank’s presence in more than 500 Indian cities gave his firm an edge over rivals at a time when distribution costs are likely to mount following abolition of front-end load charged by funds. “There is now huge opportunity specially in Tier II and Tier III cities,” Anand said. “Our ability to build low cost model into these cities is a huge advantage.”
The firm joins the likes of Italian bank UniCredit’s arm — Pioneer Global, South Korea’s Mirae Asset, France’s Axa and Japan’s Shinsei who have started operations in India’s fiercely competitive fund industry over the last two years.
More than 20 firms, including Credit Agricole and UBS, are considering entry into the 36-member Indian fund market which is forecast by the Boston Consulting Group to manage $520 billion by 2015.
The market will become even tougher for fund managers, and particularly hostile to small and new players, as a ban on entry fees charged by mutual funds from 1 August slows growth and raises distribution costs.
Axis also plans to launch a tax planning fund, two fixed-income funds and an arbitrage fund, Anand said, adding his firm would have offices in 81 cities in the next two months, helping it start selling products in more than 400 cities.
The firm has a 50-member team, including 10 staff on the fund management side. It aims to double headcount by March 2010.