India loses ten foreign AMC’s since 2010

With today’s announcement, Goldman Sachs has joined the growing brigade of foreign asset management companies (AMC's) which chose to completely exit their mutual fund businesses in India. Since 2010, a total of ten foreign AMC's including those of Shinsei, AIG, Fidelity, Daiwa, Morgan Stanley, ING Group, PineBridge, Deutsche Bank, KBC, and Goldman Sachs, have logged out of India.

Year	Foreign AMC
2010	Shinsei Asset Management
2010	AIG Global Asset Management
2012	Fidelity Fund Management
2013	Daiwa Asset Management India
2013	Morgan Stanley Investment Management
2014	ING Investment Management
2014	PineBridge Investments Asset Management
2015	Deutsche Asset Management
2015	KBC Asset Management (exits JV with Union Bank of India)
2015	Goldman Sachs Asset Management

Various articles seem to suggest that the stringent norms from SEBI (Securities and Exchange Board of India) in the form of higher net worth, investing of seed capital in open-ended schemes, quarterly disclosures on voting pattern in portfolio company resolutions, ban on entry loads, and rationalization of commissions to mutual fund distributors, have been the culprits. Nonetheless, the decision for the above rests with SEBI along with AMFI (Association of Mutual Funds in India), through which the mutual fund houses usually voice their opinion. After all, the exits of renowned foreign asset management companies' certainly do reflect poorly on the state of affairs in the Indian mutual fund business.

Focusing back to the deal between Goldman Sachs and Reliance Capital; as per the terms, Goldman Sachs Asset Management India would be receiving INR 243 crore in cash from Reliance Capital Asset Management for parting with its 100% stake in the business. The amount is approximately INR 100 crore more than what Goldman Sachs had paid to acquire the business from the original promoters of Benchmark Asset Management Company in 2011. Considering the cumulative losses of an equivalent amount reported by Goldman Sachs Asset Management India over the last four years, it seems the parent Goldman Sachs Group, Inc. was happy to exit at par.