Shares of Bank of India (BoI) surged over 2% in early trade on Monday after India's fifth largest state-owned bank announced that it will buy 51% stake in the mutual fund joint venture between telecom major Bharti Enterprises and AXA Investment Managers.
BoI will buy Bharti's 25% stake and AXA's 26% stake in the asset management company. The deal brings down the AXA's stake in Bharti AXA Investment Managers to 49%.
"The management of BoI is confident to get regulatory clearance on the Bharti AXA deal by early FY13," said N Seshadri, ED, Bank of India in an interview with ET now.
Highlighting plans of the JV, Seshadri said, "We got a fair valuation on Bharti Axa deal and will focus on third part sales via the MF JV with Bharti-AXA."
According to estimates, the value of the deal should be about Rs 5.3 crore. BoI will exclusively sell Bharti AXA Investment's products through its branch network.
he deal will help Bank of India to re enter into the 41-member-strong local mutual fund (MF) industry after shutting its MF shop in 2004.
"Since the ban on entry load, or the fee that mutual funds used to charge investors to pay distributors, in August 2009, which have made distributors disinclined to market mutual fund schemes, banks have been in demand as partners for funds. In particular, small funds, which lack the network to market their equity schemes, are keen to tie up with banks," according to an ET report.
At 10:55 a.m., shares of the company were trading 2.3% higher at Rs 348.60. The stock has hit a high of Rs 349.50 and a low of Rs 341.05.
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