For foreign firms, India’s financial services market is like the proverbial pot of gold at the end of the rainbow. Only about half of adult Indians have bank accounts. The part of the population that accesses insurance and mutual funds is in low single digits. So, the story goes, an 8-9% per annum economic expansion will bring more people into the fold and untold riches for the purveyors of these products.

Two days after Nippon Life Insurance Co. bought a slice of Reliance Life Insurance Co. Ltd, Goldman Sachs Asset Management (India) Pvt. Ltdacquired Benchmark Asset Management Co. Pvt. Ltd. It was a second coming for Goldman, which after getting a mutual fund licence in 2008 had to shelve its plans after the financial crisis struck.

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But is three years of waiting worth the Rs130 crore it reportedly paid for Benchmark? That comes to around 4.43% of the local fund’s assets under management (AUM) at the end of December. That makes it one of highest-valued deals in this industry after the financial crisis. Last year, T. Rowe Price Global Investment Services Ltd bought a stake in UTI Asset Management Co. Ltd, pricing it at 3.25% of AUM.

But UTI is one of the largest local mutual funds with a decent mix of actively managed debt and equity assets. Benchmark, a pioneer in the exchange-traded funds segment, mostly sells just those products apart from a couple of quantitative funds recently introduced. Since these are not actively managed, margins are razor thin in this segment.

Benchmark also doesn’t have a big distribution channel to boast about. It has four branches. Sans marketing muscle, sans large chunks of equity assets, sans the Benchmark brand name (which Goldman is unlikely to use since it has its own licence), it’s hard to figure out what the US company sees in the deal.

A show of strength and deep pockets perhaps? After all, for a firm that made $8.35 billion (around Rs37,745 crore today) in profits last year, $30 million is a drop in the ocean.

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