Fidelity looks to put India MF arm on the block, seeks Rs 350 cr for biz

The markets have been abuzz with media reports suggesting that Fidelity, a globally renowned fund manager with more than $300 billion in assets under management, is putting its asset management business in India on the block.

Even though no formal announcement has been made by the company, Fidelity Worldwide Investment, which runs Fidelity Mutual Fund in India , is conducting a strategic review of its India operations, which may eventually lead to a change in the shareholding pattern of the asset management company (AMC).

However, the company tried to play down the move by saying that a country-specific strategic review of its operations is an annual process and it was too early to talk of any exit.

“Fidelity Worldwide Investment is conducting a strategic review of its onshore AMC business in India. Like all strategic reviews, all options are covered. The review is underway and it is too preliminary to discuss any outcome,” it said in a statement.

Fidelity, which made its India entry in 2004, currently has around Rs 8,800 crore of assets under management. Fidelity has 15 schemes, out of which six are equity schemes, while the rest are debt schemes. But despite its massive marketing expenditure, Fidelity posted losses of Rs 62.4 crore in financial year 2011 against a loss of Rs 27. 6 crore in the financial year ending March 2010.

Around 65 percent of Fidelity’s assets are in equity funds, which generate higher fees compared with debt.

Media reports earlier pointed out that Fidelity could exit India if it got an attractive valuation for its asset management arm. According to an Economic Times report, Fidelity has appointed JP Morgan to find a buyer for its India business. Sources told the newspaper that “Fidelity may seek a price amounting to 3.5-4 percent of total assets, which would work out to Rs 300-350 crore.”

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