Mumbai: JP Morgan Asset Management, a manager of $1,013 billion assets across the world, and the AIG group that manages $670 billion are set to launch mutual funds for local investors in India.
Over the last week, the two foreign players received Securities and Exchange Board of India (Sebi) approval for opening shops in India. The last big global player that entered in this space was Fidelity Investment in early 2005.
Two more foreign players —Aegon Global and Dawnay Day—are waiting in the wings. Besides, Nikko Asset Management, a joint venture between Ambit Capital and Nikko AMC of Japan, and another joint venture Bharati Axa will also soon float funds. Currently, the domestic mutual fund industry has 30 players managing Rs3.39 lakh crore of assets.
While AIG Group has been investing in India as a foreign institutional investor since 1997, JP Morgan’s association with Indian stock markets goes back to 1989, when it launched its first India-dedicated fund called JF India Pacific Trust fund. Today it manages over $6 billion through six India-dedicated funds. Its global peers such as Franklin Templeton and Prudential Group entered almost a decade ago.
“Indian households have been under-invested in equities or equity funds. We feel that the domestic industry is still in a take-off mode and there is huge potential,” says Edward Pulling, managing director, Pacific region, JF Asset Management, who has been investing in India since 1995.
”India is one of the world’s strongest secular growth stories that is coming to the attention of a rapidly growing body of international investors… the Indian story will run for decades to come,” said Martin Porter, CIO and head of global equities at JP Morgan Asset Management.
Ravi Mehrotra, Managing Director and Head of Asia Asset Management Companies said, “we believe that the mutual fund industry in India, which has grown at a CAGR of over 26% over the last 5 years, offers a tremendous opportunity given the retail savings potential and growth momentum of the markets in India”
While JP Morgan plans to start the domestic business with an initial networth of Rs45 crore, AIG Group has earmarked $20 million.
The Indian regulator requires asset management companies to have a minimum networth of Rs10 crore.
With the growth in the number of new entrants in the industry as well as explosion in demand for skilled people in other alternate classes like private equity and hedge funds, the mutual fund industry has been witnessing an acute shortage of skilled professionals. Both these new entrants have roped in people from the existing players.
JP Morgan is headed by Krishnamurthy Vijayan, who returns to the group after heading the JM Financial Mutual Fund for five years. Nandkumar Surti, his former colleague at JM Financial will be heading the fixed income business in India.
Similarly, Saurabh Sonthalia, who heads AIG Global Investment Group was earlier with DSP ML Mutual Fund. On the investment management side, Tushar Pradhan,who was earlier with HDFC Mutual Fund will be the Chief Investment Officer, Equities at AIG.