Financial Daily from THE HINDU group of publications
Tuesday, Mar 19, 2002
Corporate - Mergers & Acquisitions
Markets - Mutual Funds
Templeton to take over Pioneer ITI
MUMBAI, March 18
TEMPLETON Asset Management (India) has entered into a memorandum of understanding to acquire 100 per cent stake in Pioneer ITI AMC Ltd, ending months of speculation over one of the most watched deals in the mutual fund industry in recent times.
Though there are no official figures available, sources close to the development put the value of the deal around $ 50 million.
The actual purchase is likely to be completed within the next two- three months. "It will take that much time for things to materialise and since we have yet to start the due diligence process, it would be too early to comment on the valuation of the deal,'' said Mr Rajiv Vij, Country Head & CEO, Templeton Asset Management.
Speaking about the synergies between the two companies, Mr Vij said, "There is a phenomenal fit. We have built a good reputation in the fixed income segment in India whereas Pioneer ITI has a strong presence in equity. Also, Templeton's distribution is strong among the broker, dealer and banking network while ITI is focused on the retail segment. Hence, there is no overlap in the marketing strategies of both the organisations.''
Rabo India Finance Private Ltd, a subsidiary of Rabobank International, was the sole strategic and financial advisor to both Pioneer and ITI in this transaction.
In the past, there have been reports stating that players such as Citibank, AIG, Prudential and Zurich, along with Templeton, were among those short-listed as prospective buyers.
A release issued by Pioneer ITI said that new entity's objective was to grow and expand India's mutual fund market through a comprehensive product line-up, widespread branch network, and extensive intermediary training and development. The managements believed that the future held promise and intended to make a joint strong effort and deploy the necessary resources to build on the enormous, and yet to be tapped potential for mutual funds in India, the release added.
Franklin Templeton started operations in India in 1996 managing over $ 825 million in assets as on end February 2002. Pioneer ITI is a joint venture between Pioneer and the Investment Trust of India (ITI), was established in 1993 and has $ 840 million in assets under management.
Our Chennai Bureau reports: According to reliable sources, the deal is expected to be worth about Rs 300 crore. This will be a windfall for ITI, which holds a 47.5 per cent stake in the AMC. ITI's public deposit, which was Rs 123 crore in January 1998, has been reduced to Rs 22 crore now. Likewise, the bank borrowings had been brought down from Rs 60 crore to Rs 18 crore.
ITI, which was part of the Chennai-based H.C. Kothari group, was sold to the Sanjay Maloo group in September 1999.
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