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MF weekly wrap: Bank of Baroda starts process to sell stake in mutual fund biz

BOB Capital Markets has been hired as the investment banker to manage the stake sale and the bank has already started the bidding process for selling stake in the AMC.

June 02, 2018 / 10:21 AM IST

In the week gone by, Moneycontrol reported an exclusive on Bank of Baroda (BoB) scouting for buyers to sell part of its stake in the AMC venture.

According to a source, BoB Capital Markets has been hired as the investment banker to manage the stake sale and the bank has already started the bidding process for selling stake in the AMC.

In December 2017, BoB purchased 51 percent stake held by foreign partner Pioneer Investments in their joint venture asset management company, raising its shareholding to 100 percent, subject to regulatory approvals. Both the partners are still awaiting the regulator’s consent.

Pioneer Global Asset Management SpA had acquired 51 percent in BoB Asset Management in 2008 and will now exit the venture. A senior executive told Moneycontrol: “Yes, even as we are in the process to buy the stake, we are looking at selling some stake if we get a good valuation before itself...We may sell whatever we have bought from Pioneer.”

The executive added, "The government also wants us to sell stake in our non-core assets and monetise them. Our AMC business is profitable, so it can help us unlock good value."

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The Finance Ministry has asked most public sector banks to sell their non-core assets as a way to generate funds for growth and capital as provisions against a growing pile of bad loans.

As on March end, Baroda Pioneer Mutual Fund's had assets under management (AUM) of Rs 13,022 crore, up 26 percent from a year ago. Currently, Baroda Pioneer operates out of 40 locations in India.

Among other developments during the week, the continued slide in the Manpasand Beverages stock hit the value of mutual funds who had invested in the company.

Motilal Oswal Mutual Fund has the highest exposure, with a 5.51 percent stake in the beleaguered Manpasand Beverages at the end of the March quarter, according to data on Value Research.

Sudden resignations by auditors of the company triggered a sharp drop in share prices.

Deloitte Haskins & Sells India quit as auditor of Manpasand Beverages a few days before the declaration of annual results. The stock plunged nearly 50 percent in five sessions following the announcement.

The most-hit scheme was Motilal Oswal Most Focused Multicap 35 Fund that owns 58 lakh shares of the company, or 1.8 percent of the scheme’s portfolio.

During the week, BOI AXA launched arbitrage fund and the fund house aims to garner Rs 100-200 crore during the new fund offer period from May 31 to June 14.

Baroda Pioneer Mutual Fund’s head-fixed income, Alok Sahoo told Moneycontrol in an interview that higher open market operations (OMO) purchase by RBI is likely to soften the bond yield.

He expects 10-year government bond yield to trade in the range of  ~7.75-8 percent during the first half of FY19, and in the range of ~8-8.25 percent during H2 of FY19.

Here are some more stories that made headlines during the week:

Mutual funds invested 7.37% of equity AUM only in IT sector in April

Principal Mutual Fund revises benchmark index for blue chip fund

HDFC Mutual Fund seeks SEBI approval for ultra short term fund

IDBI MF seeks SEBI's approval for open-ended equity scheme
Himadri Buch
first published: Jun 2, 2018 10:21 am

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