The SBI Mutual Fund (SBIMF) is close to signing a memorandum of understanding with BNP Paribas to sell off a 50 per cent stake in the asset management company (AMC).
While no clear details on the valuation of the stake could be obtained, the estimate is that the banking group BNP Paribas would be paying at least Rs 50 crore for a 50 per cent stake in the 100 per cent subsidiary of the State Bank of India (SBI).
However, officials said that this would be on the lower side as SBI is known to have put a higher valuation on the fund, factoring in the brand equity as well as its distribution network.
With all this being factored in, the consideration could go up to Rs 60 crore, said sources. This would mean selling the stake for Rs 18-21 per share.
SBI has put in an equity capital of Rs 55 crore in the fund. SBI has been looking around for six per cent of its asset under management as valuation of the outfit. Going by that, the valuation would be close to Rs 200 crore as SBIMF has Rs 3,400 crore worth of assets under management.
However, BNP is unlikely to pay Rs 100 crore for the 50 per cent stake. Another area of discussion was the management of the AMC. While BNP insists that the fund should be run by the chief executive officer, SBI, reportedly, is comfortable with a board-run company.
The agreement is expected to be signed soon and the actual deal will be struck before the end of September.
Sources said that BNP officials were in the SBIMF office over the last fortnight conducting a last minute due diligence and familiarising themselves with the staff.
The American Insurance Group (AIG) was also in the fray to pick stake in SBIMF and had conducted an inspection in September last year. Subsequently, AIG decided to withdraw from the race due to the protracted negotiation process.
According to SBIMF officials, they expect the assets under management of the fund to reach Rs 4,500 crore by the end of the fiscal.
The fund's assets under management has been steady at around Rs 3,100 crore, rising from Rs 3,095 crore as on April 2002 to Rs 3,317 crore in early July.
Out of the total assets, equity schemes account for Rs 700 crore, while the remaining (Rs 2,700 crore) is in debt schemes. SBIMF currently has 11 schemes under its management.
