Japan's Shinsei Bank to sell its Indian asset management business to Daiwa

Japan's Shinsei Bank said yesterday that that it had reached an agreement to sell its entire stake in two subsidiaries engaged in the asset management business in India to Daiwa Securities Group Inc. and Daiwa Asset Management Co. for an undisclosed sum.

Under the terms of the transaction agreement, which is subject to the approval of the Indian regulators, the Tokyo-based Shinsei Bank will sell its Indian asset management company, Shinsei Asset Management (India) Private Limited, and the administrator and fiduciary overser for the mutual funds established by Shinsei AMC Shinsei Trustee Company (India) Private Limited.

Established by Shinsei in 2007 in Mumbai, the AMC has been active in the asset management business in India's domestic market including sales of mutual funds.

Headquartered in Mumbai, Shinesei's asset management company has four branches in India, and has entered into number of distribution contracts with banks, securities companies and other local financial institutions and IFAs.

Shinsei Bank holds a 75-per cent stake in AMC, and the remaining is split between investor Rakesh Jhunjhunwala, who holds 15 per cent and the Sanjay Sachdev-promoted Freedom Financial Services Pvt. Ltd holding the remaining 10 per cent.

Both Jhunjhunwala and Freedom have agreed to sell their stake to Daiwa Asset Management.

Shinsei said in a statement that the divestiture of these two subsidiaries is part of its ongoing reallocation of strategic resources to focus on its core strengths and this divestiture is not expected to have a material impact on Shinsei's consolidated and non-consolidated financial results.

Daiwa Securities Group, in its mid-term management plan prepared in April 2009, had said that it will expand its business in Asia and emerging market countries.

''Daiwa Securities Group will capture the growth opportunity by entering the rapidly growing Indian domestic asset management business, and by acquiring this Indian asset management company, we will also reinforce and enhance our capability to provide various products to Japanese investors. This acquisition will further strengthen our business platform in Asia and will lay the foundations to seize future business opportunities in Asia,'' said the company in a statement.