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Goldman Sachs to finally launch Indian MF business in 2011

This article was posted on Dec 21, 2010 and is filed under Press Releases

This is the bank’s second attempt to foray into the Indian market after 2009.

Goldman Sachs, the world’s most profitable investment bank, is finally set to launch its Indian mutual fund business in 2011, people familiar with the matter have said.The Wall Street behemoth might also look at distribution tie-ups with Indian banks to sell its MF products, they said.

“Goldman is shaping up strategy to launch an Indian asset management business,” said a person aware about the plans, on condition of anonymity. “The firm already has a management structure in place for the business.”

Prashant Khemka would remain the head of Goldman’s Indian MF business, he added.

A Goldman Sachs’ spokesperson based in Hong Kong declined comment on the subject.

This would be Goldman’s second attempt to enter India’s crowded and fiercely competitive MF space, where 44 players jostle to manage investors’ money. In 2009, it had postponed the plan following the global financial crisis.

  • The investment bank may look at distribution tie-ups with Indian banks to sell its mutual fund products
  • Earlier in 2009, the US firm had postponed
    its India MF plan following the global financial crisis
  • Prashant Khemka will remain the head of Goldman’s MF business
  • Goldman Sachs Asset Management (India) had received regulatory approval from Sebi to start mutual fund business in India in September 2008

Goldman Sachs Asset Management (India) received the Securities and Exchange Board of India approval to start an MF business in India in September 2008. At the time, it had appointed Adam Broder as chief executive officer and Khemka as chief investment officer for the venture.

Goldman Sachs Asset Management, the asset management arm of Goldman Sachs, manages assets worth over $800 billion. In September, Goldman appointed Jim O’Neill, who coined the acronym BRIC (Brazil, Russia, India and China), as chairman of its asset management business.

Despite tough competition and distribution challenges, the lure to grab a pie of the MF business in the world’s second-fastest growing major economy is attracting foreign players to India.

France’s Natixis Global Asset Management bought 25 per cent stake in IDFC Mutual Fund last week. Japan’s Nomura picked up 35 per cent in LIC MF, while US’ T Rowe Price bought 26 per cent in UTI MF, both in 2009.

The assets under Indian MFs have more than doubled to Rs 6,73,186 crore in the past four years. Nearly 60 per cent of these are managed by the top five players. Reaching consumers has become a major challenge for Indian fund houses, as independent financial advisors are shying away from selling MF products after a ban on entry load last year reduced their commission.

source: Business-Standard

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