Rel MF to buy Goldman's India fund biz for Rs 243 crore

MUMBAI: Reliance Capital Asset Management (RCAM), which manages Reliance Mutual Fund, has entered into a deal to buy Goldman Sachs' Indian asset management business for Rs 243 crore in an all-cash deal. Goldman Sachs Asset Management has over Rs 7,132 crore, a little over half a percentage of the Rs 14 lakh crore MF market.
RCAM will take over all 12 schemes of Goldman Sachs, including the government's ambitious Central Public Sector Enterprises (CPSE) Exchange Traded Fund.Reliance Capital said that the transaction has received approval from the respective boards and is expected to be complete by the end of the year.
Goldman Sachs was given the mandate last year to manage CPSE ETF through which the government has so far raised Rs 4,000 crore by selling part of its stake in 10 central PSUs as part of its disinvestment programme. Goldman Sachs had entered the MF business in 2011 following its acquisition of Benchmark Mutual Fund for Rs 120 crore. Goldman is the third major foreign fund manager to exit India. In the past Fidelity and Stanchart sold their mutual fund business to L&T Finance and IDFC respectively.
"Benchmark were the pioneers in ETF and Goldman has built on it. With this acquisition we become the only mutual fund in India which is strong on active as well as passive fund management. Globally we have seen passive funds being an integral part of the system and in India too we believe that institutional investors and HNIs will move to ETF following the new advisory regulation by Sebi," Sundeep Sikka, CEO, RCAM.
"There will be lot of economies of scale. But more than savings it is the opportunity that this present to us. Over the last 10 years in US passive funds have been growing faster than active funds and as markets mature in India in 15-20 years passive funds might become bigger than active funds," said Sikka.