Sundaram MF to acquire Principal AMC in India for Rs 338-crore

Sundaram has over Rs 40,000 crore in AUM while Principal manages about Rs 7,500 crore

Staff Writer   /   January 29, 2021

Sundaram Asset Management Company Limited, a 100% subsidiary of Sundaram Finance Ltd., has announced the purchase of the asset management businesses of Principal Asset Management Pvt. Ltd. The deal value is Rs 338 crore.

Sundaram will acquire the schemes managed by Principal Asset Management Pvt. Ltd and acquire 100% of the share capital of Principal Asset Management Pvt. Ltd., Principal Trustee Company Pvt. Limited, and Principal Retirement Advisors Pvt. Ltd. 

The transaction is subject to the receipt of necessary regulatory approvals and SEBl prescribed processes, and Principal will continue to operate the businesses until the deal is closed.

Sundaram is a significant player in the fund management space with a 25-year track record. Sundaram has over Rs 40,000 crore in assets under management, the majority of which is in equity oriented schemes.

Principal Asset Management has assets under management of Rs 7,447 crore as on December 31, 2020 with about 90% of this in equity-oriented schemes. It has 10 equity schemes, 4 debt schemes, 4 hybrid funds. 

Principal MF started doing business in India in 2000. It’s team serves over 5 lakh customers  and works with over 20,000 empaneled distributors across the country. 

The acquisition will help Sundaram MF surpass Invesco MF and get close to Edelweiss MF. 

Commenting on the acquisition, Sunil Subramaniam, Managing Director, Sundaram Asset Management Company said, “This transaction will strengthen our presence in the marketplace with the addition of a range of schemes with a good long term performance track record across the large and mid-cap segments. This will complement our business which has traditionally been weighted towards the mid-and small-cap segment.”

Pedro Borda, chief operating officer, Principal International said, “We’ve made the decision to exit the asset management business in India. As we transition the business, customers and distributors will remain our top priority. We believe they will benefit rom Sundaram Asset Management’s larger mutual fund platform in this market.”

T.T. Srinivasaraghavan, Managing Director of Sundaram Finance added, “We will be able to leverage the combined platform to derive significant synergies. The focus for us will be on delivering a better experience to our inves[ors and distribution partners.”

The transaction is subject to approval from SEBI and other regulators, and both Sundaram and Principal will work to ensure that there will be no disruption of service to their partners and investors in the interim, and a seamless transfer once approval is obtained. One can expect the transaction to be complete in six months. 

Principal said it is committed to the continued operation of Principal Global Services in Pune and Hyderabad to provide critical technical support and services to its offices around the globe.

JM Financial Limited acted as the exclusive financial advisor and J. Sagar Associates acted as the legal advisors to Sundaram Asset Management Company. Barclays acted as the exclusive financial advisor and Cyril Amarchand Mangaldas as the legal advisors to Principal.

What investors should do?

We don’t expect any material change as of now as the fund’s strategies are likely to remain the same. There is a likelihood of a shuffle in fund managers but that will be known only after the acquisition is complete. Principal AMC said in a statement: “Please be informed that the finer details are yet to be finalized. In the interim, both companies will operate as independent entities and it will be ‘business as usual’.”

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