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Sundaram BNP JV Under Observation

If BNP Paribas and Fortis' deal succeeds, the former's Sundaram JV will get a re-look

The global mergers and acquisitions’ effects on India-based entities have led to a piquant situation for global major BNP Paribas and its local partner here, Sundaram Finance.

BNP Paribas is set to take over the troubled global banking major Fortis provided the latter’s shareholders give their assent in a meeting to be held on 28 April, 2009.

BNP Paribas then, will have to take a decision on their Indian assets management business.

As there will be a conflict of interest and the regulations don’t allow an entity to run two separate mutual funds business in India, BNP Paribas has to sell their 49.90 per cent stake or merge Fortis mutual fund business with itself, but for that it will have to take the permission of its partner Sundaram Finance.

It was reported in October 2008, that BNP Paribas has agreed to acquire Fortis' Belgium and Luxembourg operations as well as the international franchises for an estimated Euro 14.5-billion after the latter failed to survive the global financial turmoil.

BNP Paribas is already running a joint venture with Sundaram Finance, which it entered into in 2005 with a stake of 49.90 per cent. With average AUM of Rs 9267 crore as on March 31, 2009 it is the fifteenth biggest fund house among the 35 fund houses whose assets have been made available.

It has an impressive line of equity funds which are good performers. The fund house has the eighth biggest equity assets base of Rs 4986.76 crore while it ranks lower at 19 with assets of Rs 4280 crore under debt funds.

Fortis Mutual Fund (which acquired ABN Amro MF’s assets) is relatively new in the business and is on the nineteenth position and has not been too successful in the equity arena as the bulk of its assets are in debt. Of the total average AUM of Rs 5918 crore as on March 31, 2009 , its equity assets are just Rs 443 crore and debt are Rs 5475 crore.

For BNP Paribas the job gets tougher, due to the Fortis acquisition, as it will also have to integrate ABN Amro’s mutual funds assets—Fortis had bought these assets earlier.

Average Assets Under Management
Fund House  Total   Equity  Debt
Reliance Mutual Fund * 80963 19548 61218
HDFC Mutual Fund 57956 11667 46289
ICICI Prudential Mutual Fund 51456 8759 42697
UTI Mutual Fund * 48754 19055 29506
Birla Sun Life Mutual Fund 47111 4656 42455
SBI Mutual Fund 26371 10307 16064
LIC Mutual Fund 22201 1025 21176
Franklin Templeton Mutual Fund 19365 9276 10089
Kotak Mahindra Mutual Fund * 18370 3071 15245
Tata Mutual Fund 17030 4276 12754
DSP BlackRock Mutual Fund 14413 7894 6519
IDFC Mutual Fund 14377 2298 12079
HSBC Mutual Fund 9575 2439 7136
Deutsche Mutual Fund 9355 333 9022
Sundaram BNP Paribas Mutual Fund 9267 4987 4280
Principal Mutual Fund 6757 1515 5242
Fidelity Mutual Fund 6201 4006 2195
Religare Mutual Fund 6023 470 5552
Fortis Mutual Fund 5918 443 5475
JM Financial Mutual Fund 4788 1356 3432
* Total includes Gold ETFs
All figures in Rs crores
Data as on March 31, 2009