Almost six months after Sundaram Asset Management Company signed an agreement to acquire Principal Asset Management, the deal is yet to receive the market regulator SEBI’s approval.

In January, Sundaram AMC announced that it will acquire the ₹7,447-crore asset management business of Principal AMC for about ₹339 crore. SEBI had raised certain queries and the approval is expected anytime soon as the fund houses have responded, sources said.

When reached out, both Sundaram Mutual and Principal AMC did not offer a comment.

Interestingly, the average asset under management of Principal Mutual fund ever since the deal was announced has jumped eight per cent to ₹8,038 crore due to the bull run in equity market.

With a few exceptions, foreign asset management companies have not been able to sustain for long in India despite being major players globally.

Exit of foreign AMCs

The strength of foreign AMCs in India will shrink to seven with the exit of Principal Mutual Fund. Of the overall 45 fund houses, five are in joint venture with global AMC giants.

Belgium-based KBC Asset Management had exited the Indian market by selling its stake in the mutual fund business to its joint venture partner Union Bank of India. Subsequently, Union Bank sold 40 per cent stake in AMC business to Japanese life insurance firm Dai-ichi Life Holdings. Unlike their domestic counterparts, foreign players have not been able to achieve the distribution needed to get the retail investor and continue to focus on institutional business, which does not yield high margins, said Harish Dube, an independent financial advisor.

The brand connect is most important in a trust-business such as fund management and most large fund houses, such as HDFC MF, ICICI Prudential AMC, Birla SunLife MF and SBI MF have gained it with the backing of large banks or financial institutions, he added.

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