At a time when foreign fund houses are exiting Indian asset management business, a few domestic players are gung ho about starting mutual fund business.
SEBI’s latest data on ‘Status of Mutual Fund Applications’ as on March 1, 2016 shows that Yes Bank, Fortune Financial Services & Credit Capital, Trust Investment Advisors and Karvy Stock Broking are awaiting approval from SEBI to launch mutual fund business in India.
Earlier, through a press release, Yes Bank had said that it will seek SEBI approval to set up MF business soon. “Yes Bank AMC will leverage the bank’s distribution network for customer acquisition and provide customers a seamless digital experience for their investments and savings solution. The bank will simplify and integrate ‘manufacturing to distribution’ of equity and debt investment products for all its customers. The AMC will also gain from the bank’s expertise in investment advisory, wealth management solutions, debt capital markets, its significant and growing customer base & distribution network and overall execution expertise to build a large and profitable fund management franchise.”
While Yes Bank and Fortune Financial Services & Credit Capital have approached SEBI in November 2015 and June 2015 respectively, Trust Investment Advisors had applied for a license in September 2014. Karvy Stock Broking is waiting to get in-principle approval from SEBI since five years. It had applied for AMC license in November 2011.
Interestingly, all four companies have a mutual fund distribution arm. AMFI data shows that Yes Bank, Trust Investment Advisors and Karvy Stock Broking have assets under advisory (AUA) of Rs.678 crore, Rs. 1,115 crore and Rs. 5,056 crore respectively as on March 2015. The AUA details of Fortune Financial Services is not available in the AMFI’s list of top 500 distributors.
Last month, Mahindra & Mahindra Finance got SEBI approval to float an asset management business.
According to SEBI rules, the sponsor applying for a mutual fund license is required to be in the financial services business for five years and needs to have a positive net worth for five years. The sponsor should have earned profits in three of the previous five years, including the latest year. SEBI conducts an on-site due diligence of sponsors before granting an approval.
