Deutsche Bank’s DWS to buy 40% stake in Nippon Life India’s AIF arm

DWS, the asset management arm of Germany's Deutsche Bank, will purchase a 40% stake in the alternatives unit of Nippon Life India Asset Management to expand its alternative investment platform and global product reach.

Nippon Life India AIF Management (NIAIF), a wholly-owned subsidiary of Nippon Life India Asset Management, will issue new shares to DWS in consideration for the capital infusion, it said in a statement on Thursday. The two companies have signed a memorandum of understanding, and the deal is subject to relevant regulatory approvals.

Through the partnership, the two companies plan to expand their product range and tap offshore investors using DWS’s global network. They will also launch passive products for India and UCITS markets, and co-develop actively managed, India-focused funds for global distribution. UCITS or Undertakings for Collective Investment in Transferable Securities fund are mutual funds that are sold throughout European nations. Indians can invest in them under the liberalised remittance scheme limit of $250,000 a year.

Stefan Hoops, chief executive officer (CEO) of DWS, said, “India is one of the core growth markets for global asset managers for the next decades, and has long been a strategic ambition for DWS. The envisaged agreements tackle three of our priorities: drive growth in alternatives and passive, deliver on our promise to leverage our strong partnerships in Asia, and pursue our ambition to become ‘top 5 in top 5’.”

Sundeep Sikka, executive director and CEO of Nippon Life India Asset Management, said that the partnership in passive strategies and global distribution will allow the company to deliver world-class investment access to global and Indian investors.

NIAIF has raised around $1 billion in investor commitments in its 10-year track record. Nippon Life India Asset Management is India’s fourth-largest asset manager with $85 billion of assets under management (AUM) and a market capitalization of $6 billion. DWS has AUM of $1.22 trillion.

Alternative investment funds collect funds from other investors to invest in companies or projects. Category I AIFs include venture capital and infrastructure funds, while private equity and debt funds fall under Category II AIFs. Category III AIFs such as hedge funds have a higher risk appetite with aggressive investment strategies such as using algorithms for automated high-frequency stock trading.