Home / News / India /  Sundaram Asset Management acquires Principal Asset Management for 338.5 crore

Sundaram Asset Management Company (AMC) today announced the acquisition of Principal Asset Management, the Indian business of the global financial services major, Principal Financial Group for 338.53 crore. Principal AMC has assets under management (AUM) of 7,447 crore compared to assets of around 40,000 crore with Sundaram AMC, an Exchange filing by its parent Sundaram Finance Ltd showed. Principal Mutual Fund commenced business in India in 2000 but failed to grow to a significant size in the past two decades. It entered into a joint venture with Punjab National Bank in 2004 but bought out the latter's stake in 2018.

Commenting on the acquisition, Mr. Sunil Subramaniam, Managing Director, Sundaram Asset Management Company said, “This transaction will strengthen our presence in the marketplace with the addition of a range of schemes with a good long term performance track record across the large and mid-cap segments. This will complement our business which has traditionally been weighted towards the mid- and small-cap segment." 90% of the Principal AUM is in equity schemes, the Exchange filing added. Expense Ratios in equity schemes are generally higher than those in debt schemes making them more profitable for AMCs. Mr. Pedro Borda, chief operating officer, Principal International said, “As part of a systematic review of the company’s portfolio of businesses and global market dynamics, we’ve made the decision to exit the asset management business in India.

The mutual fund industry has seen some consolidation in recent years with BNP Paribas AMC acquiring Baroda AMC in October 2019. In November 2019, Muthoot Finance sought to acquire IDBI AMC which had an AUM of around 6,238 crore in FY 19 for 215 crore. However the deal was subsequently rejected by the RBI on the grounds that the activity of sponsoring a mutual fund or owning an asset management company was not in consonance with the activity of an operating NBFC.

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