Is T. Rowe Price Mid-Cap Value Fund (TRMCX) a Strong Mutual Fund Pick Right Now?
BlackRock, Inc. BLK recently agreed to sell its 40% stake in DSP BlackRock Investment Managers to the DSP Group, headed by Hemendra Kothari, thereby exiting the Indian mutual fund business.
DSP BlackRock is a joint venture between BlackRock and the DSP Group, with total assets of nearly Rs. 1.1 trillion, including mutual funds, alternative investment funds (AIFs), and assets under advisory services.
The DSP Group is one of the oldest financial firms in India and owns 60% of the stake in the joint venture.
According to a person familiar with the matter, BlackRock initially planned on buying the DSP Group’s 60% stake in the company. But, the DSP Group wanted to retain its presence in India and hence chose not to sell its stake.
Rather, BlackRock decided to sell its 40% stake to the DSP Group because it could not integrate DSP BlackRock into its technology and operating platform since it had only a minority stake in the company.
Notably, in the past few years, various other asset managers like The Goldman Sachs Group, Inc. GS, JPMorgan Chase & Co. JPM, Deutsche Bank Aktiengesellschaft DB and others exited the Indian mutual fund industry because of higher costs and stricter regulations.
Now, after the 40% stake is acquired by the DSP Group, the asset management company is going to be called as DSP Mutual Fund.
Kothari said, “For the past few years both DSP and Blackrock have been debating who will own the majority stake in the mutual fund business because Blackrock is a leader in many international markets. On the other hand, our financial group is 150 years old, which is possibly one of the oldest in India. And DSP Group is one of the few financial groups that focus purely on investment management.”
He added, “Going forward, by strengthening our technology, sales and training processes further, we will do even better, especially because the opportunities are huge and penetration is low. So far we have grown organically but going forward we may definitely look at acquisitions, depending on the circumstances.”
BlackRock, being one of the leading asset managers, offers a variety of products, including active, enhanced and index strategies through a variety of structures like separate accounts, mutual funds, iShares (ETFs) and other pooled investment vehicles. Given its strong global presence, broad product diversification, revenue mix and steadily improving assets under management (AUM), the company remains well poised for growth.
In the past year, its shares have gained 37.6%, outperforming 14.3% growth recorded by the industry.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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