With Rs 15,464 crore in assets under management, Religare Mutual Fund does not rule out the possibility of acquiring a fund house in India in order to grow big. Saurabh Nanavati, chief executive officer, Religare Asset management Company, spoke to Hindustan Times about the challenging times and the fund’s domestic and global plans. Excerpts:
The regulators are looking to institutionalise sales practice for mutual funds. How do you see it?
Mis-selling is a global issue and regulators worldwide want to clamp it down. While this will be an additional burden passed on to manufacturers and distributors, we will comply with it. Regulatory changes will have its impact in the short-term but in the long run it will be good. We need to perhaps change our business model and move in that direction.
You started by acquiring Lotus Mutual Fund. Do you plan more acquisitions?
Our vision is to build a profitable business on a large scale. Religare Enterprises has maintained that it will look to grow both organically and inorganically. In India, any acquisition that we do will have to bring something to the table for us. It might be small, medium or a large fund house, but it will have to be a value-add to what we already have.
What are your plans on the global front?
Religare Enterprises recently bought Northgate Capital in the US. In Japan we already have received the licence for investment advisory business and now we will apply for fund management license there. We expect it by the year-end. Thus, we plan to set up full-fledged local operations in these countries, both organically and inorganically.
How will they all work?
We will have manufacturing centres in each of these places and they will cross-sell each-other’s product. Japanese team will cross-sell India products and the Indian sales team will sell Japan products as and when the regulators permit.
How are investors behaving in the tough market conditions?
Globally, post Lehman, crisis investors have become risk averse and retail and high net worth individuals (HNIs) have not come in the manner they came earlier. They have been cautious and with the current market volatility driven by the European factors their sentiments are further dampened.