08 August 2015 06:28:09 IST

Pramerica buys Deutsche Bank’s mutual fund business in India

Indian currency of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. The Reserve Bank of India's battle to contain a falling rupee just got tougher. The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red. Last week's move by rating agency Standard & Poor's to cut the country's credit rating outlook to "negative" has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say. REUTERS/Vivek Prakash (INDIA - Tags: BUSINESS)

Industry sources estimate the size of the deal to be between ₹300 and ₹400 crore

Mutual fund house Pramerica has agreed to buy the asset management business of Deutsche Bank in India. While neither party disclosed the size of the deal, industry sources estimate it to be ₹300-400 crore.

The transaction is subject to approval by the Securities and Exchange Board of India and the Competition Commission of India.

As of June 30, 2015, Deutsche AMC had assets of around ₹20,720 crore, while Pramerica managed assets worth ₹2,125 crore. Both fund houses are focussed on liquid and fixed income funds.

Pramerica AMC’s proposed 50:50 joint venture partnership with Dewan Housing Finance Corporation has already been approved by the capital market regulator. The union will be rechristened DHFL Pramerica Asset Managers. “When the transaction is complete, we will have the scale and platform necessary to make our investment strategies available to clients across India and put us within sight of the top 10 asset management businesses,” said Glen Baptist, Chief Executive Officer of Pramerica International Investments.

Latest exit

Deutsche AMC had been on the block for a while now; both YES Bank and the fund house of Franklin Templeton were reported to have shown interest in acquiring it. The sale by Deutsche Bank is the latest among a slew of foreign asset managers exiting the mutual fund business in India, including Morgan Stanley (acquired by HDFC AMC), ING (Birla Sun Life), Daiwa (SBI) and PineBridge (Kotak).

Pramerica Asset Managers Pvt Ltd is a wholly-owned subsidiary of Prudential Financial, Inc of the US, and is the asset management company for Pramerica Mutual Fund here.

Ravneet Gill, Chief Executive Officer, Deutsche Bank Group India, said in a statement that the divestment is in line with its strategy of focusing on their core businesses. “Deutsche Bank Group’s overall India franchise has posted strong financial results, and we remain absolutely committed to further investment and development of our business here given that India is strategically important to the bank’s global growth aspirations,” Gill said.