French asset manager in joint venture with Indian fund manager Sundaram. France’s BNP Paribas Asset Management (BNP PAM) plans to take a 49.9% stake in Indian mutual-fund manager Sundaram Asset Management, a subsidiary of Mumbai-based Sundaram Finance. The French asset manager expects the new joint venture – Sundaram BNP Paribas Asset Management – to make it a bigger player in India’s fast-growing retail and high-net-worth investment space.

“The Indian market is one of the most exciting and rapidly developing markets in the world,” BNP PAM chairman Gilles Glicenstein says in a press release. “It has already shown substantial growth and has potential for much more.”

In the five years through 2003, total private wealth in India increased 123% to $177 billion, according to a study published earlier this year by Datamonitor, a London-based market research firm. Over two thirds of that personal wealth is in the hands of India’s 618,000 “mass affluent” and high-net-worth individuals – a category growing at an annualized rate of 17.6%. In India a mass-affluent individual has investable assets of between $50,000 and $299,000, according to Datamonitor; Indians in the high-net-worth bracket have at least $300,000 in investable assets. By 2008, the study says, mass affluent and high-net-worth individuals will number a little less than 1 million and hold assets worth about $200 billion all told.

Big picture

“There are certainly opportunities to be had in the Indian wealth market,” Datamonitor head of Asia-Pacific wealth-management analysis Alan Shields says in a March 2005 press release. “[Although] the Indian wealth market is underdeveloped, there are still a large number of affluent individuals who are not being served by the current competitors and the pool of potential clients created each year is huge.”

BNP PAM’s partnership with Sundaram Asset Management is the second such venture undertaken by a French financial institution in less than a year. In November 2004, Societe Generale paid $36 million for 37% of SBI Funds Management.

Sundaram Finance chairman S. Viji sees the partnership BNP PAM as a chance to put the company’s fund business on a faster growth path. “[This] joint venture will combine the strength of the Sundaram Finance brand, the national retail reach and investment management skills of [Sundaram Asset Management and] the international product expertise and global network of [BNP PAM],” he says. “With this joint venture, we are well positioned to build on the already strong platform that has been established by [Sundaram Asset Management].”

Bob Del Col, CEO of Boston-based investment-platform provider and BNP PAM subsidiary FundQuest, says the deal with Sundaram Asset Management “is part of [BNP PAM’s] big-picture strategic vision to provide wealth-management services around the globe.”

Though there are no short-term plans to make FundQuest’s third-party mutual fund and separately managed account platform available to Indian sponsors, Del Col says that could change. “Right now we’re concentrating on the U.S., and on exporting our technology and know-how to Europe,” he says. “But in a year or two, who knows?”

BNP PAM's stake in Sundaram Asset Management falls into its BNP PAM New Markets group, which manages about $15 billion in developing markets, including those of Argentina, Brazil, China, Morocco, South Korea and Turkey. All told, BNP PAM manages about $270 billion. Sundaram Asset Management manages about $623 million.

BNP PAM is a unit of Paris-based BNP Paribas. In one way or another the bank has been in India since the 1860s. Its BNP Paribas India unit provides corporate and investment financing as well as private banking services. –FWR

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