Japan's Shinsei Bank plans fund venture with Jhunjhunwala
Joining forces with Jhunjhunwala would give Shinsei, faster access to an industry where mutual fund assets almost doubled to $142 bn. Global CEOs of Indian origin
By Agencies |
MUMBAI: Shinsei Bank plans to team up with Indian billionaire Rakesh Jhunjhunwala to sell mutual funds in the world’s second-fastest growing major economy, two people with direct knowledge of the matter said. The business may start operations early next year, the people said, declining to be identified as details are private.
Shinsei hired former State Bank of India executive N Sethuram in August as chief investment officer of its India funds unit, Shinsei Corporate Advisory Services.
Joining forces with Mr Jhunjhunwala would give Shinsei, whose stock is the second-worst performer among Japanese banks this year, faster access to an industry where mutual fund assets almost doubled to $142 billion in the 12 months through October.
Mr Jhunjhunwala, 46, built a fortune that BusinessWeek magazine estimated last year at $1 billion by investing in companies such as Crisil and Praj Industries. “It is a highly rewarding market,” said Value Research managing director Dhirendra Kumar. Mr Jhunjhunwala “is a sexy name in the market, so at least perception-wise it could be an advantage in the early days.”
The venture is yet to be named. Shinsei will own 75% of the business and Mr Jhunjhunwala will hold 15%, they said. The remainder will be owned by employees. Mr Jhunjhunwala, in a telephone interview, declined to give details about the plan. Shinsei’s Tokyo-based spokesman Donald Macintyre declined to comment.
The Tokyo-based bank and bigger rivals such as Mitsubishi UFJ Financial Group are turning to other Asian markets for growth as profits plunge. Shinsei on November 14 posted a second-quarter loss of 8 billion yen ($72 million) as it wrote down the value of mortgage-backed securities. Shares of Shinsei have plummeted 48% this year, trimming its market value to $5.5 billion. The 85-member Topix Banks Index has fallen 32%.
Mr Jhunjhunwala, a self-professed fan of billionaire investors Warren Buffett and George Soros, rose to prominence in India with stock picks such as Praj Industries, which makes equipments for power generation from non-conventional sources.
The shares have surged 36 times since Mr Jhunjhunwala invested in January 2004. Other holdings include Crisil, the local unit of Standard & Poor’s, where Mr Jhunjhunwala holds a 7.6% stake according to regulatory filings.
The stock has risen more than fivefold since January 2005, to Rs 3,200. In a 2005 interview, Mr Jhunjhunwala said he bought the shares in January 2002 at Rs 150.
In June 2004, Mid-Day— newspaper named Mr Jhunjhunwala ‘numero uno in terms of market influence.’ India’s stock market has doubled in value over the past year to $1.66 trillion, as the key Sensitive index rose 44% and companies including DLF and Cairn India sold shares for the first time.
Wall Street securities firms including Goldman Sachs Group and JPMorgan Chase have set up mutual fund operations in India to cater to the nation’s growing class of investors.
Per-capita income in India jumped 40% in the four years to March 31, as annual economic growth averaged 8.6%. JPMorgan, which sold its first Indian fund in February, has Rs 21.6 billion ($549 million) of assets under management in the nation and is launching more plans.
Goldman Sachs got government approval last month to invest Rs 2 billion in an asset management venture.
Shinsei hired former State Bank of India executive N Sethuram in August as chief investment officer of its India funds unit, Shinsei Corporate Advisory Services.
Joining forces with Mr Jhunjhunwala would give Shinsei, whose stock is the second-worst performer among Japanese banks this year, faster access to an industry where mutual fund assets almost doubled to $142 billion in the 12 months through October.
Mr Jhunjhunwala, 46, built a fortune that BusinessWeek magazine estimated last year at $1 billion by investing in companies such as Crisil and Praj Industries. “It is a highly rewarding market,” said Value Research managing director Dhirendra Kumar. Mr Jhunjhunwala “is a sexy name in the market, so at least perception-wise it could be an advantage in the early days.”
The venture is yet to be named. Shinsei will own 75% of the business and Mr Jhunjhunwala will hold 15%, they said. The remainder will be owned by employees. Mr Jhunjhunwala, in a telephone interview, declined to give details about the plan. Shinsei’s Tokyo-based spokesman Donald Macintyre declined to comment.
The Tokyo-based bank and bigger rivals such as Mitsubishi UFJ Financial Group are turning to other Asian markets for growth as profits plunge. Shinsei on November 14 posted a second-quarter loss of 8 billion yen ($72 million) as it wrote down the value of mortgage-backed securities. Shares of Shinsei have plummeted 48% this year, trimming its market value to $5.5 billion. The 85-member Topix Banks Index has fallen 32%.
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Mr Jhunjhunwala, a self-professed fan of billionaire investors Warren Buffett and George Soros, rose to prominence in India with stock picks such as Praj Industries, which makes equipments for power generation from non-conventional sources.
The shares have surged 36 times since Mr Jhunjhunwala invested in January 2004. Other holdings include Crisil, the local unit of Standard & Poor’s, where Mr Jhunjhunwala holds a 7.6% stake according to regulatory filings.
The stock has risen more than fivefold since January 2005, to Rs 3,200. In a 2005 interview, Mr Jhunjhunwala said he bought the shares in January 2002 at Rs 150.
In June 2004, Mid-Day— newspaper named Mr Jhunjhunwala ‘numero uno in terms of market influence.’ India’s stock market has doubled in value over the past year to $1.66 trillion, as the key Sensitive index rose 44% and companies including DLF and Cairn India sold shares for the first time.
ADVERTISEMENT
Wall Street securities firms including Goldman Sachs Group and JPMorgan Chase have set up mutual fund operations in India to cater to the nation’s growing class of investors.
Per-capita income in India jumped 40% in the four years to March 31, as annual economic growth averaged 8.6%. JPMorgan, which sold its first Indian fund in February, has Rs 21.6 billion ($549 million) of assets under management in the nation and is launching more plans.
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Goldman Sachs got government approval last month to invest Rs 2 billion in an asset management venture.
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