On Monday, the DSP Group announced to buy out 40% stake of Blackrock in India mutual fund JV- DSP Blockrock Investment Managers, a 40:60 joint venture between BlackRock and DSP Group. With this, yet another foreign fund house will exit Indian mutual fund industry.
Subsequent to the transaction, DSP BlackRock Mutual Fund will be known as DSP Mutual Fund and the holding company will be called DSP Investment Managers subject to regulatory approvals.
Hemendra Kothari, Chairman, DSP BlackRock Investment Managers in a note to investors said, "As of today, the DSP Group holds a controlling stake in DSP BlackRock Investment Managers and owns 60%. I am very proud to announce that after all necessary regulatory approvals, DSP group will increase its stake to 100%. Thereafter, we will be renamed as "DSP Investment Managers".
The company as on March end reported assets under management of Rs. 86,326 crore that accounts for 4% market share.
The valuations for the deal have not been disclosed but in a general case most acquisitions or buy-outs in the industry are effected at 5-7 percent of equity assets under management of the AMC being taken over.
It is to be noted that due to lopsided growth in the mutual fund industry in which nearly 80% share is commanded by leading ten fund houses, many foreign companies have quit the industry in the last decade. The foreign players that have exited include Nomura, Fidelity, Morgan Stanley, Deutsche, ING, KBC, Daiwa, Zurich and AIG among others.
In 1996, DSG Group entered into a tie-up with Merrill Lynch Investment Managers to operate its India asset management business as DSP Merrill Lynch Asset Management. But 10 years later, the asset management business of Merrill Lynch was taken over by BlackRock.
BlackRock, that employs nearly 1,400 people will continue to operate its global financial services business from its offices in Gurgaon, Mumbai and Bengaluru.