Goldman in talks to acquire Bechmark Asset Management: Mint
05 Mar 2011
According to the Mumbai business tabloid Mint, Goldman Sachs Asset Management (India) Pvt Ltd, a new entrant in the Rs6.75-trillion Indian mutual fund industry, is in advanced talks to acquire Benchmark Asset Management Co Pvt Ltd, which has assets worth about Rs3,000 crore under management.
The newspaper, quoting an unnamed source said to have direct knowledge of the deal, said that the deal may be clinched at a valuation of 4-4.5 per cent (Rs120-135 crore) of the assets under management of the 10-year-old asset management company (AMC). The company is mainly involved in passive index investing.
According to analysts, the Indian mutual fund industry has seen several acquisitions with valuations ranging from 1.6 per cent to 13 per cent of the assets under management. They add that if the deal were to go through it would mark the first instance of an index fund-heavy AMC being bought out by a house in India.
Goldman Sachs Mutual Fund made its entry into Indian asset management segment in 2010.
The industry with 44 AMCs is passing through a difficult phase with sluggish sales and vanishing folios following a ban on entry load by the Securities and Exchange Board of India in August 2009, the Mint reported.
The move by Goldman Sachs comes as an anticipated consolidation in the mutual fund industry following the entry load ban that has hurt the profits of AMCs.
Entering the industry in December 2001, Benchmark came out with its maiden Nifty Benchmark Exchange Traded Scheme which currently boasts assets worth Rs510.87 crore. In February 2007, the company came out with the country's first gold exchange-traded funds (gold ETFs).
Benchmark was followed by 10 other fund houses that launched gold ETFs and currently the assets assets under such schemes are estimated at Rs3,255.41 crore at the end of December 2010, according to Value Research, a Delhi-based mutual fund tracker.
According the report, Goldman's acquisition of a fund house that predominantly manages gold ETFs is being seen by analysts as inspired by the potential of gold fund industry in India. They say the Indian fancy for the yellow metal has not been fully capitalised by fund managers.
ETFs earn much less commission for fund managers as compared to equity schemes, and Goldman's negotiation to pay a value of 4-4.5 per cent of assets of Benchmark to acquire the latter's assets is being felt to be somewhat high according to fund managers.
The newspaper, quoting an unnamed source said to have direct knowledge of the deal, said that the deal may be clinched at a valuation of 4-4.5 per cent (Rs120-135 crore) of the assets under management of the 10-year-old asset management company (AMC). The company is mainly involved in passive index investing.
According to analysts, the Indian mutual fund industry has seen several acquisitions with valuations ranging from 1.6 per cent to 13 per cent of the assets under management. They add that if the deal were to go through it would mark the first instance of an index fund-heavy AMC being bought out by a house in India.
Goldman Sachs Mutual Fund made its entry into Indian asset management segment in 2010.
The industry with 44 AMCs is passing through a difficult phase with sluggish sales and vanishing folios following a ban on entry load by the Securities and Exchange Board of India in August 2009, the Mint reported.
The move by Goldman Sachs comes as an anticipated consolidation in the mutual fund industry following the entry load ban that has hurt the profits of AMCs.
Entering the industry in December 2001, Benchmark came out with its maiden Nifty Benchmark Exchange Traded Scheme which currently boasts assets worth Rs510.87 crore. In February 2007, the company came out with the country's first gold exchange-traded funds (gold ETFs).
Benchmark was followed by 10 other fund houses that launched gold ETFs and currently the assets assets under such schemes are estimated at Rs3,255.41 crore at the end of December 2010, according to Value Research, a Delhi-based mutual fund tracker.
According the report, Goldman's acquisition of a fund house that predominantly manages gold ETFs is being seen by analysts as inspired by the potential of gold fund industry in India. They say the Indian fancy for the yellow metal has not been fully capitalised by fund managers.
ETFs earn much less commission for fund managers as compared to equity schemes, and Goldman's negotiation to pay a value of 4-4.5 per cent of assets of Benchmark to acquire the latter's assets is being felt to be somewhat high according to fund managers.