DSP Group-BlackRock AMC JV may be headed for a split: Report

DSP Group and BlackRock, the world’s largest investment management firm, have started discussions about ending their existing 60:40 joint venture (JV) in asset management company DSP BlackRock Investment Managers, Business Standard reported on Monday.

The market has been abuzz with chatter about the possible split for quite some time.

Moneycontrol last week had e-mailed DSP BlackRock Investment Managers with a query pertaining to the split. The company's reply was: "The stake sale is highly speculative. We strongly deny this."

According to the report by Business Standard, BlackRock is keen on continuing the business alone and is considering buying out DSP’s 60 percent stake in the asset management firm.

"The joint venture is under review but there is, as yet, no agreement on the valuations," the news daily quoted a source as saying.

This is not the first time DSP and BlackRock have made news for similar reasons.

DSP BlackRock is among the top 10 fund houses in India and managed assets worth about Rs 860 billion as on March 31.

The DSP Group, headed by Hemendra Kothari, is one of the oldest financial services firms in India. BlackRock is the world’s largest asset manager, with over USD 6 trillion in assets under management (AUM) as at the end of  December.

Historically, deals in the Indian asset management space have happened at 5-7 percent of AUM. Arriving at reasonable valuations, however, could prove tricky considering the exponential growth in mutual fund assets over the past two years.

Mutual Funds have garnered a record amount of assets over the past year, with an average monthly inflow of Rs 4,000-6,000 crore through systematic investment plans (SIPs).

The industry' assets have doubled in amount over the past three years, with overall AUM crossing Rs 21 lakh crore mark in March.

In 2017-18, mutual funds pumped in Rs 1.4 lakh crore into Indian equities, more than six times the Rs 22,200 crore put in by foreign portfolio investors (FPIs).