The CEO of Schroders Investment Management is bullish on the mid- to long-term prospects of Indian mutual fund industry.
Thus it has acquired 25% stake in the Axis Bank-promoted Axis Mutual Fund for an undisclosed amount.
"The asset management industry in India will expand in the years to come... There'll be enough opportunity for mutual funds to grow in India in the next 12 - 18 months. Opportunity to grow will play out in the years to come," said Lester E. Gray, CEO of Schroders Investment Management.
The British firm, which manages $ 291 billion worldwide, had applied to the Securities and Exchange Board of India in April 2008 to start a mutual fund business in India, but did not secure a license till last year. It was then Schroders decided to partner with a local player.
"Axis was looking for an international partner... we also realised the need for a local partner to operate in a country like India. India is a complex market in terms of distribution. A partner like Axis Mutual will help us make inroads," Mr Gray said. The deal will help the Indian fund house to access Schroders' global distribution network and advise overseas funds invested in Indian securities.
"If you take a macro view, mutual funds business across Asia is going through a tough phase. Retail investors are staying away from equity fund products in many countries across the continent.
India is not the only country where mutual funds are having a tough time," Mr Gray said. Schroders intends to bring its line of investment
products to India over the next few months. The British fund house may also give the investment mandate of 'Schroders India Fund' to Axis Mutual Fund in due course.
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