* Deal could be valued at 8 pct of JM fund assets - source
* JM Financial Asset Management CEO denies sell-off report
* Reliance shares up 0.7 pct; JM Financial soars 20 pct
* Ambani brothers ended non-compete pact this month
(Adds analyst comment, details, background)
By Pratish Narayanan
MUMBAI, May 31 Indian billionaire Mukesh Ambani
is in talks to buy a majority stake in JM Financial Asset
Management, which oversees $1.8 billion in assets, a source
with direct knowledge of the situation said on Monday.
A deal with JM Financial would give Mukesh a slice of
India's attractive fund management sector, which has drawn
investors looking to capitalise on India's rapidly growing
population and a savings rate of more than 30 percent.
Mukesh and his estranged younger brother Anil ended a
non-compete pact this month, freeing Mukesh to invest wherever
he sees opportunity, with financial services, power and
infrastructure on his target list. [ID:nSGE64P02E]
Talks with JM Financial are at an early stage and terms of
a deal have not been finalised, said the source, who could not
be identified as he was not authorised to speak to the media.
The source said the deal value could be 8 percent of the
assets under management at the unit of financial services firm
JM Financial (JMSH.BO), backing a report in the Mint newspaper.
That would indicate an investment of around $144 million.
JM Financial Asset Management, one of India's oldest
private sector mutual fund houses, having opened in 1994,
denied the sell-off plans.
"There is no truth in this. JM Financial mutual fund forms
an important part in the JM Financial Group portfolio and we
remain focused and committed towards growing this business," JM
Financial Asset Management CEO Bhanu Katoch told Reuters.
According to its website, the mutual fund manager has a
10,000-strong distributor base covering 52 locations in India.
StreetSight data on JM Financial:
Energy major Reliance Industries (RELI.BO), the flagship of
Mukesh Ambani, the world's fourth-richest man with an estimated
net worth of $29 billion, declined to comment.
At 0630 GMT, Reliance shares were up 0.7 percent, and JM
Financial was up 20 percent at a 5-week high of 38.15 rupees.
Trading in JM Financial stock was around 14 times the normal
"This makes sense as Reliance has a lot of cash and
financial services is one of the most attractive sectors in
India right now," said Gajendra Nagpal, chief executive of
Unicon Financial Intermediaries.
"From a long-term perspective, Reliance has a large retail
network and it may be looking to capitalise on that to reach a
lot of people."
India's fund market will be managing $520 billion in assets
by 2015, up from $135 billion last September, according to
forecasts by the Boston Consulting Group.
U.S. money manager T. Rowe Price Group Inc's (TROW.O)
agreement to buy a stake in India's UTI Mutual Fund, and the
acquisition of DBS Cholamandalam Asset Management by the
financial services unit of engineering firm Larsen & Toubro
(LART.BO) are among recent high-profile deals in the sector.
Reliance Industries, India's biggest listed company, is
forecast by Goldman Sachs to generate free cash flow of $18
billion between this year and the financial year that ends in
March 2014, giving it plenty of firepower for investment.
The company, with interests in oil and gas exploration,
petrochemicals and textiles, has sought out acquisitions as it
looks to expand its businesses and gain an overseas foothold.
Reliance said in April it would pay $1.7 billion to form a
joint venture with Atlas Energy ATLS.O at one of the most
promising natural gas deposit regions in the United States. It
also bought a stake in Indian freight services firm Deccan 360
to help boost its retail operations.
Mukesh Ambani, a chemical engineer by training who dropped
out of an MBA programme at Stanford University to join Reliance
in 1981, was previously not able to move into financial
services businesses such as fund management or insurance as
Anil's Reliance Capital (RLCP.BO) already operated in the
But, after a bitter 5-year feud that split India's richest
family, the brothers this month struck a surprise truce by
ending the non-compete agreement that had been a source of
acrimony between them.
(Additional reporting by Nishant Kumar; Editing by Ranjit
Gangadharan and Ian Geoghegan)