Strategy
KBC Heads Towards Indian Asset Management JV
Belgian-based KBC Asset Management and Union Bank of India said they have signed an agreement to create a joint venture asset management company in India, in which they will take a stake of 49 per cent and 51 per cent respectively.
The move underscores how India, which has seen a rapid rise in an affluent middle class and population of high net worth families, is regarded as a lucrative new market by Western investment managers.
The JV is KBC Asset Management’s first step into the Indian market.
The Indian asset management industry has been growing at the rapid rate of 47 per cent year-on-year since 2003, outpacing the growth of the industry in most other economies, including the US, UK and Brazil where asset management activities grew by 13 per cent, 29 per cent and 44 per cent, respectively, the firms said in a statement.
In terms of assets under management, Indian still has a fraction of the share accounted for by more developed economies. Indian AUM accounts for just 8 per cent of its gross domestic product, KBC said.
“Over the next five years, the retail segment of the Indian mutual fund industry is expected to grow at a compound annual growth rate of between 35 per cent and 42 per cent, a development which could see the addition of nearly nine million first-time retail customers,” Mr M. V. Nair, chairman and managing director, Union Bank of India, said.
KBC Asset Management is a 100 per cent owned subsidiary of the KBC Group, and had €174 billion ($276.7 billion) of assets under management, as at the end of 2007. Its parent is an integrated bankassurance group, covering private banking customers, retail clients and small and medium-sized firms. As well as its home market in Belgium, it has also significant presences in central and Eastern Europe, and has offices in other parts of the world.
The investment firm is mainly active on KBC’s home markets of Belgium and Central and Eastern Europe, but it is also stepping up its activities in other growth markets like China, Taiwan, Hong Kong, South Korea, New Zealand, Spain, the Netherlands, the US, Switzerland, Germany and Austria. Its bank parent is listed in Brussels and Luxembourg.
