Financial Daily from THE HINDU group of publications
Tuesday, Oct 25, 2005
Financial Daily from THE HINDU group of publications Tuesday, Oct 25, 2005 |
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Asset Management Companies Corporate - Mergers & Acquisitions BNP Paribas to buy 49.9 pc in Sundaram AMC for Rs 100 cr Our Bureau
Chennai , Oct. 24 BNP Paribas Asset Management is to pick up 49.9 per cent stake in Sundaram Asset Management Company Ltd, a wholly-owned subsidiary of Sundaram Finance Ltd. The stake sale will make Sundaram Finance richer by Rs 100.38 crore. According to a press release from the company, the transaction is to be completed in the first quarter of 2006. After the transaction is over, the company is to be renamed Sundaram BNP Paribas Asset Management Company Ltd. Sundaram AMC has Rs 2,800 crore in `assets under management', about 60 per cent of which is in equity assets. "It is a game changer," commented Mr T.T. Srinivasa Raghavan, Managing Director, Sundaram Finance Ltd. He said that BNP would bring to the table essentially two business differentiators - product expertise and global reach. Mr Srinivasa Raghavan told Business Line today that apart from possible inflows of funds for management, Sundaram BNP Paribas AMC Ltd could also earn substantial fee income from advising BNP's clients' investments in India. He observed that over time, overseas pension funds could come into Indian markets. Product expertise: He also pointed to the product expertise that would be available from BNP. BNP's expertise in designing products, such as capital protected products that guarantee the safety of capital to customers with the use of a host of derivative instruments, would be possible, he said. With the coming on board of BNP, the asset management company promoted by Sundaram Finance becomes a joint venture again. In July 2002, Sundaram Finance bought the 39 per cent stake held in the company by Stewart Newton Holdings (Mauritius) Ltd, for Rs 10.53 crore, or for Rs 18 a share. Stewart Newton had wanted to cap its stake at 39 per cent because, according to SEBI rules, any entity which has a 40 per cent stake will be regarded as a sponsor of the AMC, which has responsibilities attached to it. BNP has no problem in being one of the sponsors of the AMC. The Rs 100-crore that Sundaram Finance would get from the stake sale would enable the company raise around Rs 600 crore additionally, Mr Srinivasa Raghavan said. "That's two months lending," he said. Answering a question, he said that Sundaram Finance had no intention of converting itself into a bank.
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