By S Sharma and C Thomas, Bloomberg
Mumbai: Robeco NV, the Dutch money manager-owned by Rabobank Groep NV, said it will pay Rs115 crore ($26 million) to buy a stake in the asset management unit of Canara Bank, tapping into a growing mutual fund market.
Unit Canbank Investment Management Services Ltd will be separated into a joint venture. Robeco will own 49% of Canara Robeco, with the Indian bank holding the rest. Canara Robeco will start by the end of the year after regulatory approvals, George Moeller, chief executive officer at Rotterdam-based Robeco, told reporters in New Delhi.
“We are in the long-term positive about the stock market” in India, Moeller said. “We hope to gain 5 % of India’s mutual fund market over the next five years.” Canbank Investment Management Services handles Rs2,200 crore in equity and debt plans, according to Bloomberg data.
“Foreign funds are coming into India and the joint venture partner will help bring in new products and risk management services,” Canara Bank chairman M.B.N. Rao told reporters in New Delhi on 19 March.
Mutual funds in India managed Rs3.53 lakh crore as of February 2006, more than double the Rs1.53 lakh crore in February 2005, according to Bloomberg data.
Bank of Baroda last month said it plans to sell 51% of its asset management company to Pioneer Global Asset Management Co., a unit of UniCredito Italiano SpA.
Paris-based Societe Generale in July 2004 acquired 37% in SBI Fund Management for $35 million. Four of the five mutual fund plans giving the highest three-year return among all Indian funds are managed by SBI Funds Management.
“Banks have not been able to withstand the competitive pressures of managing mutual funds and will do well to get better skills and technology,” said Dhirendra Kumar, chief executive officer at New Delhi-based Value Research India, which tracks mutual funds.
The benchmark Sensitive Index of the Bombay Stock Exchange more than doubled in the past two years. Robeco has invested $500 million in Indian assets so far, Moeller said.
Overseas funds invested $8.87 billion (Rs39,000 crore) in Indian stocks and bonds in 2006, compared with $9.46 billion (Rs41,600 crore) in 2005. They invested $1.18 billion since 1 January, according to Sebi.
“We want to go deeper into the markets, into mid-cap and small-cap companies and cover the whole spectrum,” Moeller said. “We plan to introduce two to three of our top performing funds in India.”