Another foreign player exits Indian mutual fund space as DSP Group announces BlackRock stake buy out

In another exit by a foreign player from the Indian mutual fund space, financial services firm DSP Group today announced buyout of leading global asset manager BlackRock's 40 per cent stake in DSP BlackRock Investment Managers, which manages over Rs 1 lakh crore worth assets.

DSP BlackRock is a joint venture (JV) between DSP Group and BlackRock and is one of the leading asset management companies (AMCs) in the country.

DSP Group owns 60 per cent stake in the JV while the remaining 40 per cent is with BlackRock Inc.

"The JV partners have entered an agreement whereby DSP Group will acquire the entire 40 per cent stake of BlackRock, to become the sole owner," the Group said in a statement.

The DSP group was set up by veteran investment banker Hemendra Kothari in 1975 and it partnered with erstwhile foreign financial services giant Merrill Lynch in 1995 for a mutual fund joint venture.

Subsequently, DSL Group and Merrill Lynch parted ways and BlackRock acquired Merrill Lynch's 40 per cent stake in the Indian fund house in 2008. This followed BlackRock's takeover of Merrill Lynch's investment management division across the world.

In recent years, a number of foreign players have sold their stakes in Indian mutual fund ventures. These include Goldman Sachs, StanChart, Fidelity, Morgan Stanley, Daiwa AMC, ING Mutual Fund, PineBridge, Deutsche Bank and JP Morgan. However, some foreign players went on to re-enter Indian market, after selling their earlier ventures.

Currently, there are over 40 active mutual funds in India with a collective asset under management of more than Rs 23 lakh crore.

Following the buyout announced today, the new firm will be known as DSP Investment Managers Pvt Ltd and DSP BlackRock Mutual Fund is proposed to become DSP Mutual Fund, subject to regulatory approvals.

"The next decade will see the asset management industry in India grow manifold and DSP Group is very well poised to capture a significant portion of that growth," said Hemendra Kothari, chairman at DSP BlackRock Investment Managers.

"We will continue investing in our people, our technology platforms and our relationships with clients and distribution partners, to maintain steadfast focus on delivering long-term investment excellence," he added.

Ryan Stork, chairman of BlackRock Asia Pacific said the company is "committed to the Indian market for the long term and continues to be a fast-growing employer there, where we have over 1,400 employees in offices across Gurgaon, Mumbai and Bengaluru."

As of April this year, DSP BlackRock manages assets in excess of Rs 1.1 lakh crore (USD 16.5 billion) across equity, fixed income and alternatives with over 2 million individual investors.