The asset management sector has been experiencing a string of acquisitions, with a massive number of foreign Asset Management Companies (AMCs) being sold out. In the latest significant move, Sundaram Mutual Fund (MF) acquired Principal Mutual Fund. This merger took place on 31st December 2021. Also, the AMC has also received regulatory approval from the Securities and Exchange Board of India (SEBI) to acquire the asset management business.
Post this; some specific Principal MF schemes were merged with conforming schemes of Sundaram MF schemes and vice versa.
The Sundaram Asset Management Company, through the subsidiaries and directly, regulates assets across Portfolio management services, Mutual Funds, alternate investment funds, as well as advisory mandates and global fund.
Sundaram Finance (SFL) is the flagship organisation of the T.S Santhanam arm of the TV Group. Also, SFL is one of the largest Non-Banking Financial Companies (NBFC) in India. Its major concentration is on the financing of cars and commercial vehicles.
SFL has invested in a variety of units to offer a myriad of financial services, such as mutual funds through Sundaram AMC, insurance through Royal Sundaram, and housing finance through Sundaram Home Finance.
Reportedly, SFL had a fall in the combined net profit to Rs. 259.04 crores on a 0.5% decrease in the total Income to Rs. 1,298.99 crores in the second quarter of FY22 in comparison to the second quarter of FY21. Furthermore, the scrip of SFL had also shed 0.64% to end at Rs. 2,410.30 on the Bombay Stock Exchange (BSE).
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Unitholders who didn’t agree to the planner merger received an option to exit without bearing any exit load until 24th December 2021. Those who didn’t exercise this option were regarded as to have agreed to the acquisition. Additionally, there are three major Principal MF schemes that were taken over and renamed as Sundaram funds.
However, if there is any such unitholder who opted for Redemption but didn’t agree to the merger during the given exit window, the systematic transaction registration will not get cancelled automatically. Rather, the unitholder will have to submit a cancellation request to the Bank.
After this acquisition, Sundaram offered schemes in approximately 28 open-ended categories, such as:
|Categories||Number of Schemes|
With this merger, Ravi Gopalakrishnan has also been announced as the chief investment officer – equity.
After the closure of the deal, the currently managed schemes by Principal India and Sundaram will either get merged or will be renamed as Sundaram schemes according to their categories.
All of the Principal schemes’ investors and distributors will become investors or distributors of Sundaram. Therefore, an extensive Range of equity schemes will get available to more than 2 million investor base (of both Sundaram and Principal combines) and to the strong distribution franchise across the nation-wide network of 88 branches.
For the uninitiated ones, here are the highlights of the Sundaram Mutual Fund and Principal MF merger:
Jotted down below are certain key points that should be kept in mind to understand more about this merger:
Here are some of the revamped schemes:
|Category||Old Scheme||New Scheme|
|Large Cap||Principal Large cap fund||Sundaram Large Cap Fund|
|Large and midcap||Principal Emerging Bluechip Fund||Sundaram Large and mid cap fund|
|Mid Cap||Principal Mid Cap Fund||Sundaram Mid Cap Fund|
|Small-Cap||Principal small cap Fund||Sundaram Small Cap Fund|
As per the experts, this merger between Sundaram and Principal is going to be a positive sign for both the groups and the investors. This merger has evidently considered the vitality of continuity Factor, keeping in mind the requirement and the track record. This simply means that the schemes are likely to continue with the existing strengths. However, it is recommended that the unitholders should track the performance of schemes for a while and take review decisions accordingly.
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