Pramerica Investment Management of Prudential Financial Inc. is acquiring the Indian unit of Deutsche Bank’s Asset Management for an unrevealed amount. This acquisition is to cash in on the mutual fund industry in the country. Notably, Prudential Financial Inc. is the second largest life insurer in U.S.
The Asset managers in the country have been struggling for several years with high redemptions following the financial crisis. Eventually, this has hurt the profitability.
The sale of Deutsche Bank’s Indian unit of Asset Management to marks the most recent foreign asset manager to leave the country. The latest stock market surge tips inflow of funds are that increasing.
The net inflows into the equity mutual funds have touched $2 billion in the month of June. This is the second highest additions per month since the month of January 2008.
The Pramerica Asset Managers Pvt. Ltd. will benefit from the Deutsche Bank deal as the fund management is run as a joint venture with Dewan Housing Finance Corporation, a local partner, and the same adds assets of $3.25 billion or Rs 207.20 billion that is almost ten times higher than the current book valued to Rs 21 billion.
Deutsche Bank established its asset management business in the country in the year 2003. It was divesting the unit of asset management business in order to focus on the core business. The company leaving India is the latest among the slew of foreign companies that quit the highly competitive mutual fund industry in the country.
Back in 2014, Kotak Mahindra Bank, the private lender acquired PineBridge Mutual Fund’s Indian schemes. Also, HDFC Bank acquired the asset management unit of Morgan Stanley in the same year. Apart from these two, the other high profit companies that quit the Indian fund industry are Japan’s Daiwa Asset Management as well Fidelity Worldwide.
