VR Logo

Alliance Sold, Finally

The long suspense over the acquisition of Alliance Capital Mutual Fund is finally over. According to sources, Birla Sun Life AMC has bought Alliance Capital AMC.

The long suspense over the acquisition of Alliance Capital Mutual Fund is finally over. According to sources, Birla Sun Life AMC has bought Alliance Capital AMC. This news has come in three days after its former CIO, Samir Arora, was acquitted of charges that SEBI had leveled against him.

Alliance has been struggling with its Indian fund operations since September 2003, when SEBI charged Arora with insider trading, price manipulation and acting illegally while trying to conduct a management buy-out of Alliance Capital India. All this has affected its image and has witnessed huge redemption in the past one year. In fact, its assets under management (AUM) has fallen from Rs 2,227 crore in September 30, 2003 to a mere Rs 1,195 crore now (September 30, 2004).

With this acquisition, Birla Sun Life Mutual Fund's total AUM will increase to Rs 11,049 crore and will become the fifth largest fund house in India. Currently, UTI Mutual Fund is leading the pack with assets of Rs 20,224 crore, followed by Franklin Templeton (Rs 18495 crore), HDFC Mutual Fund (Rs 15,035 crore) and Prudential ICICI Mutual Fund (Rs 14,854 crore) as on September 30, 2004. Birla is currently ranked seventh with AUM of Rs 9,098 crore.

In all, Alliance Mutual fund manages 14 schemes -- 6 equity funds, 3 debt funds, 4 short-term debt funds and one hybrid fund. On the other hand, Birla Sun Life manages 38 funds spread over 8 equity funds, 13 debt funds, 9 short-term funds, 2 hybrid funds and 6 closed-end funds.

Post-acquisition, Birla will get some good equity funds like Alliance Basic Industries fund and Alliance Equity. This buyout will also give Birla a wide array of equity funds. While Birla has MNC, Mid-cap and Dividend Yield funds, Alliance has some sector and theme funds like Alliance New Millenium, Alliance Basic Industries AND Allance Buy India. Though there will be some duplication on the debt funds side, but over time it is expected to get even out.