BIRLA
SUN LIFE BAGS ALLIANCE'S MF BUSINESS
Putting at rest two years of speculation, Alliance Capital is
finally exiting the asset management business in India, with
the US-based fund selling its schemes to Birla Sun Life Mutual
Fund.
Birla MF is believed
to have outbid top fund houses like Principal MF, HDFC MF
and Prudential-ICICI to bag the deal. It is said to have paid
over Rs 100 crore, or 5-6%, of the total assets managed by
Alliance MF.
Alliance Capital,
which manages Rs 1,900 crore by way of assets, has about Rs
700 crore in equity assets. The fund was embroiled in a series
of controversies in the past two years and in early '03 made
an attempt to sell off its AMC business, which was scuttled
at the last minute. Two years back Alliance had over Rs 3,000
crore worth of assets.
When contacted,
SV Prasad, the CEO of Birla Sun Life MF refused to divulge
the size of the deal. He, however, said that it will be based
on the amount of assets after all the legal formalities are
completed, which he said will be over by early next year.
He also said the Birla MF will file a formal application with
Sebi for obtaining approval for the acquisition of the Alliance
schemes
The fund also ran
into trouble with the Securities and Exchange Board of India
(Sebi) banning its star fund manager Samir Arora from the
market for insider trading. Sebi also slapped a Rs 15-crore
fine on Alliance in the same case which the fund has challenged
in the Securities Appellate Tribunal (SAT). The announcement
of the deal comes just two days after SAT threw out Sebi's
order against Mr Arora and absolved him of all charges.
According to a
release issued by Alliance, "After a lengthy review of
strategic options available for its Indian MF business, it
had decided that growth opportunities for ACAM, its joint-venture
asset management business, had diminished." The company
has reached a definitive agreement to hand over its schemes
to Birla Sun Life Asset Management, it added.
Alliance Capital
said that it will continue its long history of investing in
India, which began more than 10 years ago with the launch
of the India Liberalisation Fund (ILF), a Luxembourg-registered
offshore fund.
Alliance Capital
also intends to offer its offshore MFs to individual investors
in India subject to regulations applicable to such sales.
In addition, Alliance
Capital plans to maintain an office in Mumbai with an equity
research team that studies Indian companies and markets and
offers investment ideas to global equity portfolio managers.
Other significant
divestments in the MF industry include the purchase of Zurich's
MF business by HDFC, UTI's buyout of IL&FS' MF and Principal's
takeover of PNB's MF operations.
