Hinduja Group buys Invesco stake, enters mutual funds arena

The Hinduja Group, a banking-to-healthcare conglomerate, announced its foray into the Rs 54 trillion Indian mutual fund industry on Tuesday by acquiring a 60 per cent stake in Invesco Asset Management.

The remaining 40 per cent will be retained by Invesco, currently the 17th-largest fund house in the country, with assets of around Rs 74,300 crore. Both Hinduja and Invesco will have co-sponsor status. That said, the transaction is subject to customary regulatory approvals.

The Hinduja Group formed a joint venture with Invesco through IndusInd International Holdings Limited (IIHL), a Mauritius-based investment holding company led by the Hinduja Brothers and the promoter entity of IndusInd Bank, India's fifth largest private sector bank. Both Hinduja and Invesco will have co-sponsor status.

Despite the boardroom changes, Saurabh Nanavati, the CEO of Invesco Asset Management India, will helm the new joint venture.

Acquisition spree

IIHL has been expanding its BFSI (Banking, Financial services and Insurance) footprint.

Recently, their bid for Reliance Capital and its subsidiaries (Life, Health & General Insurance, Asset Reconstruction, Research & Securities Broking, etc.) was approved by the National Company Law Tribunal (NCLT).

Shot in the arm

Joining hands with the Hindujas will equip Invesco Mutual Fund with a nationwide banking distribution network.

Currently, the Indian asset management industry is dominated by bank-backed fund houses like SBI MF, ICICI Prudential MF, HDFC MF, and Kotak Mahindra MF, among others.

Nanavati, who will lead the joint venture, explained that a "strong domestic partner will significantly increase the ability to expand into more Indian cities and towns" and tap "a rising middle class that will prefer transparent investment products like mutual funds and ETFs".

Invesco forayed into the Indian mutual fund industry in 2012 by acquiring 49 per cent of Religare Asset Management. Later, in April 2016, it bought the remaining stake, and the fund house was renamed Invesco Mutual Fund.

Also read: SEBI halts AMCs from investing in overseas ETFs