Prudential Fin to Sell 50% in Pramerica to Dewan Both cos to form an equal JV to grow mutual fund biz, valuation to start in a few weeks US-based Prudential Financial Inc., which manages $1.3 trillion globally, will sell a 50% stake in its Indian asset-management company Pramerica Mutual Fund for an undisclosed sum to Dewan Housing Finance Co., according to three people with direct knowledge of the development. The move is aimed at expanding the asset management business, leveraging the mortgage lenders vast network across the country “Both companies have reached an agreement to form an equal joint venture to grow the mutual fund business and will start the valuation in few weeks,“ one of the three persons said. The Indian mortgage lender, which offers loans of . 15-25 lakh, wants to use the joint venture ` to expand into financial services beyond home loans with the help of products from its American partner. A Pramerica Mutual Fund official declined to comment on Sunday. Dewan Housing is already associated with Prudential. It holds a 74% stake in Pramerica Life Insurance with Prudential owing the rest. Kapil Wadhawan-owned Dewan Housing has aggressively moved into other areas in the past few years as it looks to transform itself into a financial services company offering alternative assets, insurance and mutual funds, apart from home loans. Dewan Housing, the second largest private sector housing finance company in India with . 44,822 crore in assets in March, has expanded its retail network to more than 550 branches in the past six months. Its well regarded by rating agencies and has built a five-member advisory panel by poaching several topnotch professionals from rivals. On June 26, rating agency Credit Analysis and Research Ltd or Crisil upgraded it to the highest AAA grade, which will help the home mortgage firm borrow cheap from banks and investors. There are challenges and opportunities in seeking to expand the mutual fund business as only 10% of Indians invest in such avenues and prefer bank fixed deposits, gold or real estate. “Investors are holding back from putting their money into mutual funds due to their perceived high risk and a lack of information on how mutual funds work,“ said a report on mutual fund investments in India released in June by Boston Analytics, a research and analytics firm, based on a survey of approximately 10,000 respondents in 15 Indian cities and towns until March 2010. India had 46 mutual funds until June 2013. “The primary reason for not investing appears to be correlated with city size.Among respondents with a high savings rate, close to 40% of those who live in metros and Tier I cities considered such investments to be very risky, whereas 33% of those in Tier II cities said they did not know how or where to invest in such assets, according to the report. Dewan Housing, which offers loans to home buyers in towns and villages, will use its branch network to sell mutual funds with appropriately tuned products from its American partner. Indias top 15 cities contribute to 87% of the total assets under management or AUM of. 10 lakh crore. Mumbai, Delhi, Chennai, Kolkata and Bengaluru contribute 74% of the total AUM. “Dewan and Pramerica will have to break new ground and bring new investors from semi-urban and rural areas into the net to grow its business,“ a financial consultant said. In December 2011, Dewan Housing purchased the 74% stake owned by real estate developer DLF in the life insurance joint venture with Prudential International Insurance Holdings for around . 200 crore, making its entry into the segment. source et - 01/09/2014
Posted on: Tue, 02 Sep 2014 07:29:40 +0000
Recently Viewed Topics
© 2015