Canada’s 132-year-old insurer Manulife chooses to stake in Mahindra AMC. Canadian insurance multinational Manulife is invading the Indian mutual fund industry by a strategic stake buy in Mahindra Asset Management Company, a specialist in the financial industry. Headquartered in Toronto Manulife has picked up a 49 % stake in Mahindra Asset Management for $35 million to expand its business. Marking its entry into the 43-member big Indian mutual fund industry. The deal values the Mahindra AMC Manulife mutual fund unit of the Mahindra and Mahindra group at Rs 500 crore. It has been declared that Mahindra AMC has joined into a joint venture with Manulife Asset Management Singapore that is a part of MFC ( Manulife Financial Corporation)
Target/PartnerAcquirer/ PartnerStake %Estimated Deal Value in (crore)AMC Valuation (as % of AUM)Year
Mahindra AMCManulife4924310.402019
Reliance Nippon LifeNippon Life434,4844.462019
NomuraLIC35301.302016
Morgan StanelyHDFC mutual fund100150-1704.5-5.02013
UTI AMCT Rowe Price266503.602010
The above table is a comparison between the target partner and acquired partner that what is collaboration results. The Mahindra AMC & Manulife joint venture has the highest AMC Valuation.

Background

Manulife, which was founded in 1887 as the ‘The Manufacturers’ Life Insurance Company’. Manulife Investment Management is a global wealth and asset management part of MFC, carrying on more than 150 years of financial stewardship with its global HQ in Toronto, Canada, and its major services are in Asia, Canada, and the United States. Mahindra Asset, which began operations in July 2016, controls assets of Rs 5,000 crore across 9 schemes. They were ranked 29th in terms of assets in the industry. Manulife manages $849 billion of assets worldwide. Manulife Financial Corporation is the first international financial services group that supports people to make their options easier and lives better. Work primarily as John Hancock in the United States and Manulife elsewhere. Provide financial advice, support, as well as wealth and asset management answers for individuals, groups, and institutions. At the end of 2018, they had more than 34,000 employees, above 82,000 agents, and 100+of distribution partners, working almost 28 million customers. As of March 31, 2019, they had over C$1.1 trillion (US$849 billion) in assets under management and administration, and in the past 12 months, they made C$29.4 billion in payments to our customers. The principal operations in Asia, Canada, and the United States are where they have served customers for more than 100 years. With our global headquarters in Toronto, Canada, they trade as ‘MFC’ on the Toronto, New York, and the Philippine stock markets and under ‘945’ in Hong Kong.

Future with Mahindra-Manulife asset management joint venture

MFC had over $849 billion in AUM and administration on 31st March 2019. The Joint Venture takes together Mahindra’s domestic market power and tracks record of happily building businesses centered on meeting customers’ needs with Manulife’s global wealth & asset management skills and plenty of experience in maintaining the needs of consumers over advanced and expanding markets. Mahindra will operate 51% and Manulife will become 49% stake owner in Mahindra AMC. Manulife matches as the right imperative partner for Mahindra Mutual Fund as they bring an immense pool of fund management talent, backed by global best systems and processes. Mahindra has 2 best performing mutual funds in 2020. When Mahindra AMC will be merged up with Manulife they will offer high AMC Valuation of mutual funds as described in the above table. Mahindra-Manulife asset management joint venture will center on promoting the information and convenience of market-oriented financial instruments. That will include mutual fund products, to satisfy the requirements of the rapidly increasing investor base in India.

Regulatory requirements

While the quantum of stake buy is not directly known if Manulife takes up to 39 %. Then it will be passed as a stakeholder. But if it takes 40 % it will be qualified as a promoter. SEBI MF regulations set anyone with over 10 % stake, but less than 40%, as a stakeholder. Since the early 2000s, several joint ventures have been engaged in the mutual fund industry, made by new asset players with one sponsor more than 40 % and another stakeholder among 10 % but less than 40 %. In the case of 2 players holding 40 %each, both will be seen as co-sponsors. And the same level of administrative responsibility will apply to both, as per SEBI Mutual Funds Regulations 1996. As per guidance, a foreign entity can buy up to 100 % in an Indian AMC.

SEBI due diligence

In 2010, SEBI, during Chairmanship of CB Bhave and KN Vaidyanathan as ED of MF Department, changed the policy position. To add the same level of due diligence for all Mutual players, the stakeholders, sponsors, and co-sponsors. This, it was observed, will close the bypass entry for players by stakeholder route without a due diligence exercise and make them go by absolute diligence examination, said a former SEBI DGM who worked in its mutual fund department throughout that tenure. There was the extension of retail investor handling and investor servicing experience for a different player in mutual funds, both in the joint venture and new player category, making Mutual Fund players fit and skillful for Mutual Fund Industry, joined the former SEBI Official. In the event of Manulife Insurance choosing up a stakeholder or co-sponsor stake in Mahindra Mutual Fund, it will get a go-ahead from SEBI, post a due diligence analysis on Manulife. Mutual funds in India offer corporate, retail, high net worth investment products and retirement solutions. This calls for background expertise in investor administration and servicing which Mahindra Mutual Fund requires to leverage from global standards of Manulife Insurance.

Statements by the Manulife & Mahindra team

Mr. Anil Wadhwani, CEO & President of Manulife Asia, said “We are delighted to be partnering with Mahindra Finance to help the expanding middle class in India by bringing expertise from our existing business in providing over 10 million customers across 16 Asian markets with our holistic investment presents across mutual funds, investment-linked products, and pension. We are extremely happy that Mahindra also shares our intensity for helping customers and collectively we will make investment decisions more comfortable and the lives of Indians better.” Mr. Ashutosh Bishnoi, MD & CEO, Mahindra Asset Management Company said “Mahindra Asset Management has, over the last few years, strongly made in-roads into regions beyond the traditional investment markets of India. Our experience proves that there is a huge appetite for investment products and the potential for extension, in these markets. Manulife Asset Management fits as the right strategic partner for Mahindra Asset Management as they bring an immense pool of fund management talent, supported by global best practices and methods. Manulife’s on the ground experience in global emerging markets will support to provide to the requirements of the developing Indian retail fund market.” Mr. Michael Dommermuth, Head of Wealth and Asset Management, Manulife Asia, said “We are very delighted to be partnering with Mahindra to begin our experience to Indian consumers and further increase our worldwide footprint. Mahindra Finance has grown a market leader by concentrating on meeting unmet customer requirements, which mirrors our own experiences in building our Asian franchise.”