KBC to exit Indian MF biz by selling 49% stake in JV to Union Bank

KBC Asset Management of Belgium is exiting the Indian asset management business by selling its 49% stake in mutual fund joint venture Union KBC Asset Management Company to Union Bank of India.

Though the valuation was not disclosed by the AMC, market participants peg it around 1% of average assets under management (AAUM) of the fund house.

According to the data from the Association of Mutual Funds in India, total AAUM of Union KBC AMC was at Rs 2,672.23 crore during the July-September quarter.  “It’s not (a) very positive sign for the Indian mutual fund industry, as we have seen several exists of foreign players from India. With losses piling up for the fund house, I think it didn’t make good proposition for KBC to stay invested in India,” said a senior member of the fund house on condition of anonymity.

This is the second exit of foreign fund house from India in the current calendar year. Earlier, Pramerica AMC bought out assets of Deutsche AMC.  Other foreign players such as ING Investments, Morgan Stanley Mutual Fund, Fidelity mutual Fund and Daiwa Mutual Fund had also exited the Indian markets.

Union KBC has been managing assets of Union KBC Mutual Fund since 2011. It offers a wide range of products in India under different asset classes such as equity, fixed income and gold.

Johan Thijs, CEO of KBC Group, said: “This agreement fits in with KBC Asset Management’s strategic focus on KBC Group’s core markets and activities. I would like to thank our Indian clients, shareholders, staff and all other stakeholders for the trust they have placed in KBC.” For the financial year 2014-15, Union KBC AMC reported loss after tax of R21.16 crore.

Arun Tiwari, chairman & managing director of Union Bank, said the bank has always stated its firm belief in the potential of the Indian market for investment funds. This transaction reaffirms the bank’s vision to provide all financial solutions under one umbrella, which, apart from banking products and services, also include life insurance products through its joint venture Star Union Dai-ichi Life Insurance Co, and mutual fund products through Union KBC AMC. He reiterated the commitment of the bank towards offering portfolio of services to investors under its own brand.