Mumbai: Religare Enterprises is buying Landmark Partners , a US-based private equity and real estate investment firm with assets under management worth $8.5 billion.
The New Delhi-based financial services group will buy about 55% in Landmark for roughly $170 million, or Rs 770 crore, valuing the American asset manager at over 3.6% of its total assets, said two people familiar with the matter.
Shachindra Nath, group chief executive officer of Religare Enterprises, confirmed the development, but declined to comment on the deal size. “This acquisition is part of our inorganic growth strategy. We have a chest of $1 billion and will use it to buy asset managers worldwide over the next couple of years,” he said. Landmark executives could not be reached for comment.
Earlier this year, Religare bought Northgare Capital, a US-based fund-of-funds manager, but did not disclose the size of the deal.
The company, majority owned by brothers Malvinder and Shivinder Singh, who sold their stake in generic drugs maker Ranbaxy Laboratories to Japan’s Daiichi Sankyo in 2008 for roughly $2 billion, has been in talks to buy asset managers in the US in the last two years.
It was one of the top contenders for the fund management unit of US-based troubled insurance giant AIG last year. Religare was rumoured to be in talks with a couple of domestic mutual funds to buy out their business.
The Landmark acquisition will catapult Religare’s assets under management, including the money managed by Northgate and its Indian mutual fund, to almost $15 billion, Nath said. Reliance Mutual Fund , India’s largest asset management company, had assets worth Rs 1.07 lakh crore or $23 billion on September 30.
Domestic mutual fund industry officials, on condition of anonymity, said the deal is not cheap by valuation standards in developed markets.
“The acquisition is certainly not cheap. Asset management companies in the US and Europe normally would not get more than 2-3% of their assets,” said a top executive of a bank-owned mutual fund. “However, given that there is lot of cheap capital available, Religare can use its expertise in Indian markets to channel it well,” he said.
Asset management companies in emerging markets, including India, are usually valued at 4-6% of their assets because of their growth potential. Recently, L&T Finance, the financial services arm of engineering major Larsen and Toubro, bought DBS Cholamandalam Asset Management for Rs 45 crore, valuing DBS at 1.55% of its total assets under management.
In June last year, Japan’s Nomura bought a stake in LIC Mutual Fund for about 2.5% of fund’s assets. In 2009, IDFC bought Standard Chartered Bank’s asset management business for close to 5.7% of its assets.
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