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Our Bureau

New Delhi March 19 The Netherlands-based Robeco Groep NV, part of the European banking major Rabobank Groep, will buy 49 per cent stake in Canara Bank's asset management arm. Robeco will pay Rs 115 crore to Canara Bank for its stake in Canbank Investment Management Services Ltd (CIMS).

"The total valuation of our asset management entity is Rs 230 crore and 49 per cent stake sale will bring about Rs 115 crore," the Canara Bank Chairman and Managing Director, Mr M.B.N. Rao, told newspersons after signing a memorandum of understanding with Robeco for a joint venture to undertake asset management business in India.

While the proposed venture has got the nod of the Reserve Bank of India, approval from the capital market regulator SEBI and the Foreign Investment Promotion Board would be sought soon, he said.

The new company called `Canara Robeco' would aim to position CIMS into a dominant player. Canara Robeco aims to capture five per cent market share in the next five years, the Robeco Groep Chief Executive Officer, Mr George Moller, said. The joint venture would float five new products, especially equity-based in the coming months, he added.

Rabo India Finance would be the advisors to Canara Bank for this strategic alliance.

Mutual funds

The European company's entry follows other multinational players such as ABN Amro, ING Group, HSBC, Franklin Templeton, Prudential, Standard Chartered and Fidelity.

Currently, the mutual fund industry in India is undergoing a boom phase, with assets under management (AUM) more than doubling between 2004 and 2006. The total AUM of the mutual fund industry as on January 2007 is over Rs 3,30,000 crore. Canbank is a relatively smaller player with AUMs of about Rs 2,200 crore.

Financial tools

Speaking on the occasion, the Union Finance Minister, Mr P. Chidambaram, said, "we are pursuing goal of financial inclusion. One of important financial tools for achieving this is mutual funds."

The Government is actively promoting the mutual fund industry so that benefit is shared with small investors, he said.

Currently, household savings stood at over 22 per cent of GDP, half of which was in financial instruments. "We plan to increase household savings in financial instruments by at least 20 per cent," he added

As regards acquisition, the CMD of Canara Bank said, "If there is an opportunity, the Bank would definitely look forward to it. In terms of consolidation, as and when it happens, definitely Canara Bank would be one of candidates for certain opportunities."

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