JP Morgan, AIG to launch mutual funds in India

JP Morgan Asset Management, a manager of over $1.013 trn assets across the world, and the AIG group that manages $670 bn will be launching their mutual funds for local investors in India. Both have received the Securities and Exchange Board of India (SEBI) approval for opening shops in India. Fidelity Investment in early 2005 was the last big global player that entered the Indian mutual fund space. Aegon Global, Dawnay Day, Nikko Asset Management, a JV between Ambit Capital and Nikko AMC of Japan, Bharti-AXA, another JV between Bharti Enterprises and asset management firm AXA of France are some of the other players wanting to float funds in India. Currently, the domestic mutual fund industry has 30 players managing Rs. 339,000 crores of assets. JP Morgan plans to start the domestic business with an initial net worth of Rs. 45 crores, AIG has earmarked $20 mn. The Indian regulator requires asset management companies to have a minimum net worth of Rs. 10 crores.

JP Morgan is headed by Krishnamurthy Vijayan, who was heading the JM Financial Mutual Fund for five years. Nandkumar Surti, also of JM Financial, will be heading JP Morgan’s fixed income business in India. Similarly, Saurabh Sonthalia, who heads AIG Global Investment Group, was earlier with DSP Merrill Lynch Mutual Fund. On the investment management side, Tushar Pradhan, who was earlier with HDFC Mutual Fund, will be the Chief Investment Officer, Equities at AIG.

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Shinsei Bank to set up mutual fund business in India

Another Japanese firm is planning to enter the asset management business in India. Shinsei Bank is reportedly forming an asset management JV with the South-based Andhra Bank. This is the second such announcement by a Japanese financial services company – earlier Nikko AMC had announced a similar kind of JV with the Ambit group. Shinsei will have a majority stake in the business. Shinsei had previouslyannounced a tie-up with UTI MF to invest $300 mn, raised from Japanese investors, in the Indian stock markets. Of late, many foreign funds such as Japan’s Mitsui, Korea’s Mirae, UBS, Aviva, Pioneer, etc. are planning to enter the Indian mutual fund space.

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Nikko, Ambit form AMC JV

Japan-headquartered Nikko and the Ambit group have agreed to form an asset management joint venture in India. Nikko Asset Management has assets of about $90.7 bn under management. It has been an active participant in the offshore Indian asset management market for over a decade now and was one of the earlier foreign institutional investors in India via the group’s regional base in Singapore. Since 2004, Nikko Asset Management has invested in additional offshore infrastructure, most notably by establishing a regulated group company in Mauritius and a dedicated India fund management team in Singapore that has enabled the group to expand its Indian investment management capacity rapidly, in particular by facilitating the successful launch of the Nikko BRICs Equity Fund in March 2006.

Ambit is one of the leading financial services group in India. Its primary interests lie in investment banking, private equity, stock broking and consulting. It was established in Mumbai as a boutique investment bank in 1997 by Managing Director Ashok Wadhwa, a former Managing Partner of Arthur Andersen in India.

With respect to the deal, Nikko intends to acquire a 74.9% of the JV while Ambit will hold the remaining portion. The two firms have already agreed to many of the key terms of their cooperation and anticipate entering into a definitive agreement in early 2007. The JV plans to commence the formal licensing process with the Indian financial regulators and plans to beef up infrastructure in anticipation of the formal launch of investment activities.

Ambit has just recently announced a JV with TV18 and the Centurion Bank of Punjab for providing an online broking platform to retail clients.

Credit Suisse, UBS, Aviva, Korea`s Mirae Asset, AXA (with the Bharti group) and Pioneer, are some of the other big-ticket names that are planning to enter the booming Indian mutual fund business.

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