Motilal Oswal Plans To Sell Stake In AMC, I-banking Arms

Date:27/09/11,

M&A,

Domestic Deal, Announced,

Motilal Oswal Financial Services looking to sell a little less than 26%stake in its asset management and investment banking businesses, said Chairman and Managing Director Motilal Oswal.

We are in talks with global players to offload a minority stake in these two businesses. Nothing has been finalised,” he said, declining to give any names.

Motilal Oswal Asset Management Company (AMC) launched its first fund in June 2010. It had average assets under management (AUM) worth INR 345 crore for the quarter ended June 30 this year, shows data from the Association of Mutual Funds in India. It runs three exchange-traded funds (ETFs) – MOSt Shares M100, MOSt Shares M50 and MOSt Shares Nasdaq 100.

The fund house has applied to launch an ETF based on gold and plans to launch another based on government bonds. “We will remain an ETF specialist,” said Oswal. TFs are one of the fastest growing categories. As of March 31, the AUM of ETFs rose from INR 6,916 crore from INR 1,403 crore as of March 31, 2009.

Like most brokerage stocks, those of Motilal Oswal have declined 52%in this year till now, as a fall in the cash market volume due to subdued retail participation and a rise in the low-yielding options segment has dented profitability. In comparison, the Bombay Stock Exchange benchmark, the Sensex, lost 21.7 % during the same period.

Oswal said his firm was planning to add people in the wealth management, asset management and investment banking businesses.

Motilal Oswal Private Equity Advisors has launched its second PE fund, to raise $200 million (INR 980 crore), Oswal said. “Road shows are on at present. We expect the first closure to happen by next month and hope to raise $100 million by then.”

The fund aims to raise about 30 to 40 % of the targeted amount from domestic investors and the rest from abroad, mostly from Gulf countries, Oswal said. “This fund will invest in companies across sectors with a proven profitability record. The average ticket size for the investment would be $15-25 million.”

Motilal Oswal PE has already invested about $130 milllion from its first fund, Oswal said.