Canbank MF in deal to pick up GIC MF plans

Canbank Mutual Fund has signed an agreement of sale with GIC Mutual Fund to purchase all existing schemes of the latter.

The deal was struck last week and will be formalised within two months after all the formalities are completed. N R Ramanujam, managing director, Canbank Mutual Fund, confirmed to Business Standard: "GIC MF has accepted our offer to take over their schemes."

Sources close to the deal said that SBI Mutual Fund and LIC Mutual Fund were also in the race to takeover GIC MF's schemes. Sources added that Canbank MF has agreed to pay about 6-7 per cent of the assets under management with GIC MF on the date of the transfer. The due diligence for this deal was carried out by ICRA for Canbank MF.

Ramanujam said the main incentive for Canbank MF to take over GIC MF's schemes is the latter's relatively large retail base. GIC MF has five schemes with assets under management (AUM) of about Rs 105 crore, the bulk of which is in equity, according to sources.

Canbank MF has an AUM of about Rs 1,600 crore in 15 schemes, as per data on the Securities and Exchange Board of India website.

Canbank MF officials said "GICMF schemes will add almost 1,20,000 retail investors to their already existing investor base of about 2,20,000." Ramanujam added the purchase fits into their plan to tap the growing retail market.

Sources said that GIC MF's investors will be given an option to continue with Canbank MF or exit with no exit load. Canbank MF officials confirmed that this deal involved only the transfer of schemes and not the employees of GIC AMC.

A senior GIC AMC official confirmed the agreement of sale with Canbank MF but said that no decision had been taken on the employees of GIC AMC. "They will be taken care of appropriately," he added.