The JP Morgan deal is in line with recent acquisitions in the mutual fund industry, says Nitin Jain, Chief Executive Officer, Global Asset & Wealth Management, Edelweiss Group in an interview to CNBC-TV18.
He puts the purchase price for JPMorgan's mutual fund business around 2 percent of assets under management. The buyout idea is not to monetise the Rs 7,000 crore of assets that Edelweiss will be inheriting, says Jain.
The focus, rather, would be on scaling up team and achieving size over the next year and a half. He adds the acquisition will bump up group's assets under management to around Rs 45,000 crore by end of next year.
Whille agreeing that the acquisition will increase the employee cost of the asset management business, Jain said the employee cost ratio of JP Morgan was pretty reasonable. "They were managing Rs 14,000 crore at the peak with 70 people; that is a very high level of productivity and we are hoping that the same team will be able to deliver a lot more on our platform as we are far more focussed and have a wider product suite," Jain said. At worst, Edelweiss's asset management business would lose Rs 8-10 crore in the first year of the acquisition, Jain said, adding it would not much much of a difference either to the asset management arm or the aggregate earnings of the group.
Below is the verbatim transcript of Nitin Jain’s interview with Reema Tendulkar and Latha Venkatesh on CNBC-TV18. Reema: If you could tell us the deal contours. What is the amount that you have paid? A: We are not talking about the exact amount, but it is fair to say that it is pretty much in line with a few recent transactions that have happened. If you also add to the cost of people because we are taking over the entire team, it is pretty much in line with the last few transactions.
