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Franklin Templeton India to Acquire Pioneer ITI

Largest Private sector Indian mutual fund is created with the acquisition of Pioneer ITI AMC by Franklin Templeton. Together the merged entity has an asset base of Rs. 8035 crore as on February 28, 2002. Besides the assets, the merged entity will have distinct competitive advantages - widest product breadth, excellent performance track-record across product categories, and wide investor base.

Templeton Asset Management (India) has entered into a Memorandum of Understanding to acquire 100% shareholding in Pioneer ITI AMC Limited, subject to due diligence, Trustee, SEBI and other regulatory approvals. Both Templeton and Pioneer ITI have an exclusive focus in India on asset management. The actual purchase is likely to be completed in the next 2 to 3 months.

Together the merged entity has an asset base of Rs 8035 crore as on February 28, 2002. This will make the merged entity the largest mutual fund in India after Unit Trust of India.

"This is an exciting development for all of us, and it creates new and significant opportunities for Pioneer ITI's investors, distributors, agents and employees" said Vivek Reddy, Chief Executive Officer of Pioneer ITI AMC. "The management team at Pioneer ITI looks forward to working closely with Templeton to continue providing world class service and transparency, superior investment performance and a quality customer experience". This acquisition is a key indicator of Franklin Templeton's efforts to expand internationally and further demonstrates their commitment to growing their mutual fund operations in India.

There is good fit and compatibility between the two organizations, with Franklin Templeton having built substantial name recognition for its fixed income expertise in India, while Pioneer ITI's strong equity culture and long-term track record in equity funds is well-recognized. Also, there is very little overlap between the two companies in terms of marketing strategy and sales focus. Templeton is strong with institutional and affluent clients from the large distributor and banking channel, whereas Pioneer ITI has achieved success with retail investors from agents and independent financial planners. Further the back office capability of Pioneer ITI and the in-house investor servicing operation throws open exciting possibilities for the combined entity.

The new organization's objective is to grow and expand India's mutual fund market through a comprehensive product line-up, widespread branch network, and extensive intermediary training and development. The managements believe the future to hold promise and intend to make a joint strong effort and deploy the necessary resources to build on the enormous, and yet to be tapped potential for mutual funds in India.

Franklin Templeton established operations in India in 1996 and is one of India's fastest growing fund houses managing over Rs 4012 crore in assets as on February 28, 2002. Pioneer ITI is a joint venture between Pioneer and the Investment Trust of India (ITI), and was established in 1993 as India's first mutual fund in the private sector. Pioneer ITI has Rs 4023 crore in assets under management from a base of over 747,000 investor accounts spread across the country. Rabo India Finance Private Limited, subsidiary of Rabobank International was the sole strategic and financial advisor to both Pioneer and ITI in this transaction. Rabo India is one of the India's leading investment banks in the financial services arena.