The competition in the mutual fund industry is set to intensify further with market regulator Securities and Exchange Board of India (SEBI) considering nine entities that have evinced interest in this business.
Some of the new age financial services firms that had applied include Emkay Global Financial Services, Angel One, Abira Securities, PhonePe, Helios Capital, Alchemy Capital Management, Abira Securities, Capitalmind, Old Bridge Capital Management, Unifi Capital and Wizemarket Analytics.
In fact, Alchemy Capital owned by Rakesh Jhunjhunwala, who made a splash in the aviation industry with launch of his own airlines Akasa, has been waiting for mutual fund licence since last January.
Last year, SEBI had given in-principle approval to Bajaj Finserv, Zerodha Broking and Frontline Capital Services to launch mutual fund.
The 44-member mutual fund industry registered an average asset under management of ₹38-lakh crore in the June quarter. Interestingly, the top-10 fund houses account for 80 per cent or ₹30.64-lakh crore of the AUM. The next 10 mutual fund houses have an asset of ₹5.84-lakh crore under management.
The new age fintech companies have their task cut out as they have to make all-out efforts for making inroads into smaller cities with the help of distributors as market in top-30 cities is dominated by top 10 players in the industry, said Siddesh Kamath, an independent MF distributor.
However, he added unlike in earlier days investors are willing to bet on fund houses which deliver on returns rather than going by brand name.
The rush for launching mutual fund business started catching pace ever since the regulator eased profitability norms for sponsor companies two years back to facilitate innovation and enhance reach to more investors.
SEBI said tech-enabled financial solutions, sponsors that are not fulfilling profitability criteria at the time of making application, shall also be considered eligible to sponsor a mutual fund subject to having a net-worth of not less than ₹100 crore for the purpose of contribution towards the net-worth of the Asset Management Company. This net-worth of the AMC has to be maintained till the time it posts profit for five consecutive years.
Existing players have to maintain a net-worth of ₹50 crore and required to show net profit in three out of the immediately preceding five years, including the fifth year.