BHARTI Enterprises is in talks with Bank of India, the fifth largest state-owned bank, to sell its 25% stake in the domestic asset management joint venture with Axa Investment Managers, said two people familiar with the matter. The stake buy will pave the way for Bank of India's re-entry into the 41-member strong local mutual fund industry, after having shut this business in 2004. Bank of India is negotiating to buy additional stake in Bharti Axa Investment Managers other than Bharti's share in the venture, said one of the people, who are privy to the matter. The Axa Group owns 75% in the mutual fund venture with assets under management (AUM) worth 510 crore as on September 30. Total AUMs of the mutual fund industry were 7,13,281 crore as on September 30.
Talks between the parties are in advanced stages, but Bank of India wants a higher stake because of the network it would bring in," the person said. Bank of India, which has a strong presence in states such as Maharashtra and Gujarat, has about 3,200 branches across the country. A top Bank of India official, confirming the development, said, "We are in talks with three entities for our re-entry into mutual fund business. Bharti Axa is one of them."
Bharti has been scouting for a buyer for its stake in the mutual fund venture for the last two years. Most of the talks for a prospective partner have been with banks, mainly state owned because their reach across the country would help the fund sell its schemes better. Since the ban on entry loads (or the fee that mutual funds charge investors to pay distributors) in August 2009, which sparked distributors' apathy towards mutual fund schemes, banks have been in demand among mutual funds — mainly mid and small-sized — which lack the network to push their equity schemes. Many state-owned banks are flooded with offers to buy stakes in asset management companies. That is the reason why Bank of India would be in a position to negotiate for a higher stake.
Currently, most state-owned banks such as State Bank of India, Bank of Baroda, Canara Bank which hold stakes in mutual fund ventures, own at least 49% in them.
