Pramerica Mutual Fund is close to buying a 39% stake in Ahmedabad-based retail distribution outfit Prudent Corporate Advisory Services for about Rs 20 crore, according to two persons close to the deal.
The stake acquisition will help Pramerica, which manages over Rs 2,100 crore worth of assets, widen its distribution base significantly as Prudent ranks among the top five retail fund distribution companies.
Officials at both Pramerica Mutual Fund and Prudent declined to comment on the development.
Prudent, which was formed in 2000, offers personal and corporate investment planning services through mutual funds, third party products, portfolio management services, fixed income and real estate.
It is also a corporate agent for Kotak Life Insurance. Prudent services assets worth Rs 3,500 crore, of which about 60% is invested in equity funds. It manages about 1,25,000 retail systematic investment plan folios.
Prudent, which has partnered over 4,000 independent financial advisors, has 48 branches spread across western and northern India. Prudent earned commissions worth 21 crore last year, according to AMFI.
Pramerica intends to start it PMS segment soon; this deal may help the company get rich clients from Prudent's strongholds in Gujarat, Uttar Pradesh, Delhi and Punjab," said the marketing head of a mid-sized fund house.
However, many distributors said Prudent may not be the right pick for Pramerica.
"Prudent was a strong retail distributor till about two years ago... it lost the game when it forayed into real estate. Foreign fund houses will not be really happy to partner with anybody who does real estate broking," said a Mumbai-based distributor.
Source: http://economictimes.indiatimes.com//articleshow/11969583.cms
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