Union Bank of India will buy KBC Asset Management’s 49 per cent stake in Union KBC Asset Management — the joint venture between the two companies and Union KBC Trustee Company.
The joint venture was established in 2009. In the July-September 2015 quarter, Union KBC Asset Management had average assets under management (AAUM) aggregating to ₹2,672 crore.
According to the Association of Mutual Funds in India data, the AAUM of 44 mutual funds during the reporting period was at ₹13,15,760 crore.
The public sector bank, however, did not disclose the deal size. According to mutual fund industry thumb-rule, an acquirer usually pays 2 to 2.5 per cent the AUM to buy equity schemes and 0.75 to 1 per cent for debt schemes. So, the pay out by Union Bank to KBC Asset Management will be in proportion to the latter’s holding.
Union Bank, in a statement, said the transaction, which is subject to regulatory approvals, will have no impact on the joint venture’s client positions and product portfolio.
Arun Tiwari, Chairman and Managing Director of Union Bank of India, said the transaction reaffirms Union Bank’s vision to provide all financial solutions under one umbrella which apart from banking products and services includes life insurance products through its joint venture Star Union Dai-ichi Life Insurance Co and mutual fund products through Union KBC AMC to its customers.
Tiwari said his bank is committed to offering a portfolio of services to investors under its own brand.
Shares of Union Bank of India closed at ₹182.35 apiece, up 4.83 per cent over the previous close on the BSE.