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Fund Divorce

Eight years since opening of the fund business, Sundaram and Newton parting ways is the sixth fund divorce of the joint venture partners in the business. Sundaram claims going alone and with possibility of pooling in a foreigner at a later date.

Sundaram Finance will buyout the 39 percent stake held by Newton in the Sundaram Newton AMC. Sudaram Newton AMC is capitalised at Rs 15 crore of which Sundaram Finance holds 61 percent of the AMC while 39 percent is held by Newton. The equity of the AMC is yet to be valued.

Strong on philosophy, the AMC was yet to make its presence felt in the rapidly evolving Indian marketplace. Today, the five-year old joint venture has Rs 796 crore assets under management in its eight funds in operation including the two closed-end equity funds. Of the total assets, Rs. 652 crore (81 percent) is in its bond fund, Sundaram Bond Saver.

Soon after the setting up of the joint venture, Newton UK was acquired by Mellon Bank and its subsidiary Dreyfus Corp., a leading mutual fund in the US. Mutual fund business in India was opened for private participation in 1993.

In eight years, this will be the sixth exit of a joint venture partner from India. First was the JP Morgan's exit from ICICI AMC in 1997, to make way for Prudential of U.K. The other withdrawal was Wellington Asset Management from the Anagram AMC. This was driven by the Lalbhai Group's exit from all finance related businesses. In 1999, Capital International, the US based fund manager's interest was acquired in Birla AMC. This was to facilitate AV Birla Group's foray in financial services encompassing insurance, mutual fund, securities trading and retail distribution of financial products. Birla and Sun Life of Canada have equal equity participation in all businesses except Insurance. In 2000, Dresdner RCM exited Tata AMC to pave way for equal partnering of TD Waterhouse in the AMC. In 2001, Cazenove the UK based fund house sold out its 49 percent stake in the Cholamandalam AMC in favour of Murugappa Group.