Scheme-merger rider for mutual fund M&As

Green light to a recent mutual fund acquisition was given only after similar schemes of the acquirer and the acquiree were merged. The case relates to DHFL Pramerica Asset Managers buying Deutsche Bank's Indian asset management unit.

"This is the first time the market regulator has insisted on scheme mergers for approving a M&A (merger and acquisition) deal. This could set a precedent for all future deals," said a sector official. "It's positive for the sector as scheme mergers are not a priority for fund houses."

Scheme mergers would make approval for M&As more time-consuming, said experts. Merger is insisted by the market regulator as too many schemes spark confusion for investors. Also, in 2011, Morningstar said that scheme mergers bury below-average performance or cut the number of offerings.
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