Rationalisation in TER seems to have opened door for AMCs to explore consolidation opportunity to reduce costs and increase profits in the Rs.26 lakh crore mutual fund industry.
Two mid-sized AMCs - Baroda MF and BNP Paribas MF have entered into a merger today, Bank of Baroda said in an exchange filing. While the release did not mention name of the new merged entity, sources said it would be called Baroda BNP Paribas MF.
The merged entity would look to leverage both BNP Paribas AMC’s expertise in global asset management and BOB's experience in running Indian retail networks. The merged entity will consolidate schemes of both the fund houses and create a more complete range of schemes as well as larger sized schemes, the filing said.
The merged entity also hopes for a stronger balance sheet to meet capital needs and widening distribution relationships with intermediaries for future expansion.
BOB and BNP Paribas will respectively hold a stake of 50.1% and 49.9% of the paid up share capital of the merged AMC and a stake of 50.7% and 49.3% of the paid up share capital of the merged trustee.
Baroda AMC’s AAUM for quarter ended March 31, 2019 was at Rs.11,319 crore and for BNP Paribas AMC the number stood at Rs 10,072 crore including PMS and Advisory.
The merger comes at a time when most emerging fund houses have seen a decline in their assets. Of the 20 fund houses at the bottom (based on AAUM), as many as 15 of them witnessed their a decline in their assets in July-September. Based on AAUM, both BNP Paribas MF and Baroda MF are among these 20 fund houses at the bottom.
