Page 22 - Banking Finance April 2016
P. 22
MUTUAL FUND
MUTUAL FUND
Edelweiss to acquire JP Foreign mutual funds may shift their Fund Managers
Morgan's mutual fund
business in India to India Indians, and the worry of transfer pric-
ing scrutiny.
Edelweiss Asset Management an- Some top foreign funds mainly foreign
nounced the acquisition of JP mutual funds could be the first to take "As things stand today, long-term in-
Morgan's mutual fund business in advantage of special taxation regime vestors, especially mutual funds, are
India that has assets worth over Rs to attract offshore fund managers to
7,000 crore, marking yet another set up a base in India, say actively considering shifting
exit of a foreign fund house from the people close to the develop- fund managers to India.
over Rs 13 lakh-crore industry. ment. However, others such as PE
and pension funds which in-
Under the deal, Edelweiss will ac- These asset managers have vest in India, some of the
quire all onshore fund schemes man- approached their tax advi- regulations could still create
aged by JP Morgan Asset Manage- sors to prepare a feasibility problems," said a person with a direct
ment India including its country- report on what could be the impact of knowledge of the matter.
based onshore mutual fund business such a transition. Tax experts point out
and the international fund of funds,
subject to regulatory approvals, Edel- that while the government has sorted While some issues still need to be
weiss said in a statement. some issues, there are two major issues ironed out, asset management firms
which could spoil the party, especially are expected to make an assessment
Post acquisition, the AUMs of the for government, private equity and of the potential opportunity and take
combined entity would be Rs 8,757 pension funds. The issues are funds advantage of this regime," said
crore. Along with the schemes, Edel- having to give a declaration that not Sameer Gupta, Partner and FS Tax
weiss said it is committed to absorb- more than 5% of the total investors are leader, EY.
ing majority of employees of JP Mor-
gan ensuring business continuity as Sebi tells MFs to reduce number of funds
well as a platform for enhanced
growth. SEBI has told mutual funds to drastically reduce the number of funds under
management and stick to only one fund per category in an attempt to end the
Edelweiss Group Chairman and CEO complexities of mutual fund investing. The regulator believes that the current
Rashesh Shah said, "The Group con- products list, longer than the number of actively traded listed stocks on stock
tinues to remain focused on the In- exchanges, is confusing investors.
dia growth story and making inroads
into the retail space by leveraging The regulator wants every fund to have one scheme under each category. This
our well diversified platform. could include liquid, liquid plus, ultra short-term, short term, income, gilt,
monthly income plan, and credit fund for investors in fixed income plans. For
equity, the definition should be large cap, mid cap, micro cap, ELSS, balance
fund, arbitrage fund, concentrated fund.
22 | 2016 | APRIL | BANKING FINANCE
