French insurance giant Axa, America’s Capital International, Dutch giant Aegon and UBS are all planning to enter India’s fast-growing asset management business, lured by a robust stock market performance and buoyant fundamentals in Asia’s fourth-biggest economy.
While Axa and Aegon are relatively new to India, Capital International is already a big investor as an FII. It is now seeking to expand its presence with an asset management business.
Representatives of the leading financial giants are talking to possible local partners for a tie-up before approaching the Securities and Exchange Board of India (Sebi) for a formal approval.
Axa is a large French insurance giant but is interested in exploiting the potential of the asset management business. The company is also believed to be keen on an insurance tie-up.
Aegon, the Dutch financial services giant, has already set up shop in India and is keen on insurance, pension funds and asset management.
Sebi regulations require asset management companies to give at least 25% to an Indian partner. Sebi regulations seem to have gotten over that hurdle given the size and potential of the Indian market.
Capital had a tie-up with Aditya Birla group in the early 1990s which broke up, allowing the Birla group to strike a deal with Sun Life of Canada.
The domestic mutual fund industry is about Rs 1.5 lakh crore and grew by about 60% in the year thanks to a robust stock market.
The sensex leapt 73% in 2003, the second-best performer in Asia, contributing to a number of new schemes. The sensex may not have risen so much in 2004 but strong economic fundamentals and healthy corporate performance is buoying investor interest and attracting new entrants.
Dutch banking giant ABN-Amro became the latest to enter the business when it launched its schemes some time ago.
Experts say the entry of so many new players is likely to trigger a fresh wave of consolidation in the industry, which has already seen the exit of some high profile foreign players such as Zurich, Alliance Capital and Pioneer.
Recently, Alliance sold its business to Birla Sun Life and exited the country.
Source: http://www.techtree.com/techtree/jsp/article.jsp?article_id=72090&cat_id=643
