Mumbai: State-owned lender Bank of Baroda (BoB), on Friday said that it has signed a binding agreement with BNP Paribas Asset Management Asia Ltd for a potential merger of their mutual fund business, in an all-stock deal, the bank said in a stock exchange filing.
According to the filing, Baroda Asset Management India Ltd. will merge with BNP Paribas Asset Management India Pvt. Ltd., while BNP Paribas Trustee India Pvt. Ltd.’s merger with Baroda Trustee India Pvt. Ltd. The transaction is subject to regulatory approvals.
Once the merger consummates, BoB will hold a 50.1% stake in the resulting asset management company (AMC), while BNP Paribas Asset Management would hold 49.9%. The shareholding of BoB and BNP Paribas in the merged trustee company would be 50.7% and 49.3% respectively.
The merger will help in growing BoB’s mutual fund business further by leveraging on both BNP Paribas' global asset management know-how and the public-sector lender’s experience in running Indian retail networks to further grow the business, the bank said.
The consolidation will lead to greater business synergies and will also help in creating a complete range of schemes as well as larger sized schemes, the bank said.
The merger will also provide the resulting firm a stronger balance sheet and net worth to meet capital needs for future growth and expansion. It will also strengthen its distribution relationships with different types of intermediaries to widen the coverage and outreach to customers, the bank added.
The average assets under management (AAUM) for the Baroda AMC stood at ₹11,320 crore and BNP Paribas AMC was ₹10,073 crore, as of 31 March.