Long ago when I asked the mutual fund regulator’s office why there were no Mergers and Acquisitions happening in the mutual fund industry he said ‘because it is easy to get a new license’. Chuckle Chuckle.

Now 3 companies Indiainfoline, Union Bank of India with KBC Asset Management and India Bulls have all got the licenses for launching their mutual funds.

The interesting statement in the news item is SEBI saying they will not give a license to a ‘non-serious’ player. Sounds funny.

A company comes in puts Rs. 10 crores as networth. Then establishes offices all over the country, spends or invests in people, offices, advertising – about Rs. 400- 500 crores over the next 5-7 years, I am sure he will be serious, right?

I mean Nirmal Jain is a serious businessman why will he invest Rs. 400 crores in a business UNLESS he is able to convince his board that it is a good business? After all a big business house in India got the license and then just returned it when they felt they cannot add value to the business. Motilal Oswal, Edelweiss, India Infoline are all run by first gen businessmen with a board to whom they have to answer.

There are 43 mutual funds, 4 or 5 make profits and the others make losses. Now if 23 others are applying for a license, they know what they are doing, I presume. Benchmark was happy with the returns that they were getting, so they sold off to Goldman Sachs.

So an entrepreneur sets up a business, invests his time and money to render a service. At some stage for whatever reason he sells off the business and gets ahead in life.

Was Benchmark not a serious player?

Sure they were. However they realised (perhaps) that now it requires deeper pockets to run the business for the next 20-30 years…so they sold off. Now is GS a great name in managing other people’s money? NO.

However SEBI had to give a license to GS for the acquisition of Benchmark !! Not sure how much time this took though!

Well here is the ET news …

http://articles.economictimes.indiatimes.com/2011-03-23/news/29178477_1_fund-mf-licence-asset-management-industry

Related Articles:

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

  1. Hi Subra,

    “Now is GS a great name in managing other people‚Äôs money? NO.”

    This is very serious for Indian investor community. Let see how GS deal with SEBI to extend their expertise in fraud & cheating investors in India.

  2. GS was a key player in setting up the 2008 financial meltdown – Their expertise in lobbying for de-regulation is unparalleled

    Subra
    Apart from Benchmark acquisition, what is GS involvement in the Indian FS space? Please let us know

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>