The Hindu : Business : Rabobank arm to pick up 49 p.c. in Canbank MF

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Tuesday, Mar 20, 2007
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Rabobank arm to pick up 49 p.c. in Canbank MF

Special Correspondent

Canbank AMC to be renamed Canara Robeco; deal valued at Rs. 115 crore

Canara Bank to get Rs. 115 cr. from stake sale New entity to float five products

— PHOTO: R. V. MOORTHY

TARGETING HOUSEHOLDS: M. B. N. Rao (centre), Chairman and Managing Director of Canara Bank, exchanging documents with George Moller, Chief Executive Officer of Robeco Groep, after signing a joint venture in AMC business in New Delhi on Monday. Union Finance Minister P. Chidambaram looks on.

NEW DELHI: Robeco Groep NV, Dutch asset manager and a part of European banking major Rabobank Groep, is to pick up a 49 per cent stake in Canara Bank's asset management arm to mark its entry into the country's growing mutual fund sector.

With 139 billion euros as global assets under management (AUM) and an operating profit of 233 million euros in 2005, Robeco has entered into an agreement with Canara Bank to pay Rs. 115 crore for its 49 per cent shareholding in Canbank Investment Management Services Ltd. (CIMS).

Speaking to newspersons here on Monday after inking the memorandum of understanding (MoU) with the Robeco, the Chairman and Managing Director of Canara Bank, M. B. N. Rao, said: "The total valuation of our asset management entity is Rs 230 crore and 49 per cent stake sale will bring about Rs. 115 crore.''

While the Reserve Bank of India (RBI) has already given its nod to the stake sale, Mr. Rao said the proposal would now be placed before Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB) for the necessary clearances. According to the Robeco Groep CEO, George Moller, the Canbank AMC, to be renamed as Canara Robeco, would make efforts to capture a market share of five per cent in the mutual funds segment in the next five years. In the coming months, the new entity would float five new products, most of them being equity based.

Speaking on the occasion, Finance Minister P. Chidambaram said: "We are pursuing [a] goal of financial inclusion...one of [the] important financial tools for achieving this is mutual funds.'' As India's growth story till date had mainly benefited large investors such as promoters and directors, he said the Government was now actively promoting the mutual fund industry to benefit the small investors.

At present, household savings stand at over 22 per cent of the country's Gross Domestic Product (GDP), of which half was financial instruments.

"We plan to increase household savings in financial instruments by at least 20 per cent,'' Mr. Chidambaram said.

In India, while the 32 mutual fund players account for a total AUM of over Rs. 3,50,000 crore, Canbank is still a relatively small player with an AUM of about Rs. 2,200 crore.

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