Sundaram BNP Paribas ups capex in fund services push

The Indian fund services venture of BNP Paribas Securities Services, which globally has over $7.5 trillion in assets as part of its custodian business, is looking to get a bigger piece of the action. BNP's joint venture with Sundaram Finance Limited, where the Indian partner has 51 per cent stake, is taking a number of steps towards spreading its wings. Sundaram BNP Paribas Fund Services is upping its capital expenditure, looking to add to its mutual fund client base and also eyeing business from private equity funds, says Shridhar Iyer, its chief executive officer.

The company will spend Rs 22 crore on capex in the current year, equal to a third of the total capital spent since inception in 2008. The partners have so far invested Rs 65 crore in the business. "The money will be spent mostly on technology. Some of it will be spent for operational purposes to maintain the infrastructure which is already in place," said Iyer.

The firm currently provides fund accounting services for mutual funds, a back-office service meant for tracking how a mutual fund invests its money. It currently has two clients-Sundaram Asset Management Company and BNP Paribas Mutual fund. BNP Paribas had average assets under management of Rs 3,762 crore in the March quarter, according to data from the Association of Mutual Funds in India. Sundaram had average assets of Rs 14,871 crore in the same period.

Iyer hopes to add a couple more clients soon, he said, noting there are over forty mutual funds in the country.

Sundaram BNP Paribas is currently present in 141 locations with the ability to scale up to 500 through the networks of its partner firms, he added.

Interestingly, the company is also looking to act as a transfer agent as well as provide fund accounting for private equity funds, extending its back-office services to the private equity space. The private equity part of its operations is scheduled to go live in around three months time, he said.

The fund services business of mutual funds is largely divided between two players - Karvy Computershare and Computer Age Management Services. Some funds, such as Franklin Templeton, have an in-house fund service provider.