The Hindu : Business : SBI divests stake in mutual fund arm to Societe Generale

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Thursday, Jul 15, 2004

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Business

SBI divests stake in mutual fund arm to Societe Generale

The Chairman of State Bank of India, A. K. Purwar (left), with the Director of International Business Development, Societe Generale AMC, Christian d' Allest, at a press conference in Mumbai on Wednesday. - Photo: Paul Noronha

MUMBAI, JULY 14. State Bank of India has divested 37 per cent stake in SBI Fund Management Pvt. Ltd., its mutual fund business, to France-based Societe Generale Asset Management (SGAM) for over $35 million.

"The partnership should lead to the French mutual fund giving us a lot of input, particularly in risk management, product development and technical aspects, which could help position SBI Fund as one of the top players in the mutual fund industry," SBI Chairman, A. K. Purwar, told reporters after signing the memorandum of understanding with the French AMC.

"Both buyer and the seller are comfortable with it and the money is expected to come in after all the necessary approvals from the Government, the Reserve Bank of India, the Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB) are in place, which is expected in the September quarter."

SBI would now have 63 per cent stake in SBI Fund, he said, adding as per the agreement a third party could not be inducted for seven years.SBI Fund had assets under management of around Rs. 5,500 crores with a market share of 3.51 per cent as on June.

The director-international network of Societe Generale AMC, Christian d'Allest, said, "The partnership provides us with a key position in the Indian MF industry."

Mr. Purwar said the French entity, which has aggregate AUM of over 252 billion euro worldwide and is operating in 20 countries, would get proportional representation on the SBI Fund board, which could be two places.

SBI was also open for tie-ups for its factoring and merchant banking businesses, he added.

Mr. Purwar said with this partnership, SBI Fund would now have to rework its business projections for the current year. The induction of the French AMC as stake-holding partner would also give a fillip in cross selling of mutual fund products, which currently was being conducted through 600 branches of SBI group, he said.

The SBI Fund has an investor base of about 8.1 lakh customers.

Apart from using the distribution network of its parent bank for selling its products offered through its 20 schemes now, the company operates through its own investor service centres and desks at 34 locations besides having its own agent network.

The SBI group, for the last two years, was trying to leverage its vast network of 13,600 odd branches for focussing on cross-selling, he said.

For the life insurance business, the bank has a tie-up with Cardif "but has no plans as on now to start a joint venture for non-life insurance," he said, adding SBI was at present distributing products of New India Assurance.

The target for premium income from insurance was Rs. 1,000 crores in 2004-05, he said. — PTI

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