With Goldman Sachs buying out the entire stake in Benchmark AMC, the acquirer plans to launch on-shore products in India once the deal is fully closed.
Oliver Bolitho, Head of Goldman Sachs Asset Management in Asia, in an interview with Chandan Kishore Kant, says with recent changes in the regulatory framework for mutual funds, there is an opportunity for a broader spectrum of products in India. Edited excerpts:
What made you buy out Benchmark AMC?
We saw in the Benchmark business and in the Benchmark team a combination of an attractive platform, strong team and a solid market share led by products, principally the Nifty products and the gold one, which have established a clear brand leadership.
What synergies did you find?
One is with the regulator in India having restructured the rule over the last two years to focus on distributors and the asset management community on the growth of the asset under management, which we think is a long-term beneficial thing for the Indian market.
So, the opportunity for a broad spectrum of products, including ETFs (exchange-traded funds), in India is an attractive one.
When would Goldman Sachs be launching its own schemes?
As soon as we can. But the very important consideration before this is full closure of this deal and, thereafter, successful integration of the Benchmark business and its team with the Goldman Sachs AMC. The first step is regulatory approval, which, I believe, will take three to six months.
During that time, if the deal is closed fully, then we have to move towards integration of the teams and the businesses.
Once the closing of the deal is established and if we are confident the integration is on its way effectively, these processes (of launching products) can be run in parallel.
How do you see the Indian ETF market?
We think it is an attractive opportunity. Restructuring of the model with a long-term AUM growth is one of the big drivers of development of platform elsewhere in the world.
The growth, we believe, will happen in the asset management market, as the Indian population is richer and economy would continue to grow.
Would you be adding newer products in the ETF category, apart from your onshore funds?
We have been working with the Benchmark team for months now. They have plans to develop more of exposures, and we are supportive of their plans to continue to develop their pipeline.
With the traditional active management, innovation is an extremely important driver of growth in the ETF space. And, we see significant opportunities for this business as part of our Indian entity to grow our product line, client base and its assets under management.
Would you fully retain existing employees of Benchmark?
Our plan at this stage is to integrate the teams.
Could you share the deal value?
We cannot, as it is a private transaction with the current owners of Benchmark.
After taking over Benchmark, would you look for further inorganic growth in India?
My expectation is that we will focus on integrating people, launching onshore mutual fund business and driving growth organically.
For the past 20 years, we have managed Goldman Sachs AMC with an organic growth focus. We continue to believe organic growth is an important part of our future.
That said, if we identify attractive opportunities for us to acquire strong teams or strong platform, which we can then integrate and grow organically, we will look at those opportunities. In all our efforts, we will try to develop our Indian business.
