Hinduja Group enters MF space as IIHL picks up 60% in Invesco AMC

(L-R)-Mr. Andrew Lo, Senior Managing Director and CEO of Invesco Asia Pacific, Mr. Ashok Hinduja, Chairman, IIHL and Moses Harding, CEO, IIHL at the signing ceremony

Hinduja Group’s IndusInd International Holdings (IIHL) on Tuesday announced entering the asset management space with the acquisition of a 60 per cent stake in US-based Invesco’s domestic arm Invesco Asset Management India (IAMI).

Invesco Mutual Fund (MF) is the 17th-largest fund house in India with average assets under management (AUM) of over Rs 74,300 crore in the March quarter. Click here to follow our WhatsApp channel

According to Invesco, the India arm manages nearly Rs 85,400 crore through mutual fund schemes and offshore advisories.

IIHL and Invesco have formed a joint venture (JV) for the purpose. The latter will hold a 40 per cent stake in the JV. The two companies will become the sponsor of the fund house. The deal is subject to regulatory approvals, the companies said in a press release.

ALSO READ: IIFL, Geojit: Brokerage stocks tank up to 40% in 2 mths; Time for pullback? IIHL is the promoter entity of IndusInd Bank, the fifth-largest private-sector bank in India. The deal will strengthen the distribution of Invesco MF.

“Both partners bring their respective strengths to the venture with Invesco’s portfolio of global products and processes, and IIHL facilitating a strong distribution network of 11,000+ pan India touch points and 45 million customer base,” the release stated.

The Invesco acquisition signals Hinduja Group’s aim to straddle the entire financial ecosystem. After emerging as the successful resolution applicant to acquire Reliance Capital under the Insolvency and Bankruptcy Code, the group acquired control of various firms of the beleaguered financial services company in areas such as life, general and health insurance, broking and asset reconstruction.

The Invesco deal is seen as a win-win because India’s MF space is dominated by bank-backed fund houses. SBI MF, ICICI Prudential MF, and HDFC MF are the three largest fund houses in the country, while Kotak MF, Axis MF, Bandhan MF, and Canara Robeco MF also feature among the top 15. In the case of most of these fund houses, the sponsor bank is its largest distributor.

Almost all large banks in India have an associate fund house with Bandhan Bank being the newest entrant. The Bandhan Financial Holding-led consortium had completed the acquisition of IDFC Asset Management Company last year.

The MF space in India has seen several new entrants, mostly fintechs and portfolio management services, over the past few years amid growing investor awareness. The new players include Zerodha, Groww, Bandhan, Samco, Helios, and Old Bridge. They have entered through fresh licences or acquisition. Jio Financial has also applied for MF licence in a JV with US’ BlackRock and is currently awaiting the regulator’s nod. At present, the industry has 45 players.

Invesco India AMC: Big player

>17th largest domestic asset manager in India The MF industry has witnessed strong growth in the post-Covid period with the AUM doubling in the past four years. The average AUM, which stood at Rs 27 trillion in Q4FY20, has now surged to Rs 54 trillion, shows the data from the Association of Mutual Funds in India.

>Rs 74,314 cr average assets under management in Q4FY24

>53% AUM in 13 active equity schemes

>37 schemes managed across equity, debt, hybrid and passive categories