(Revises throughout to include confirmation from T. Rowe Price,
terms of deal.)
T. Rowe Price Group Inc. (TROW) agreed to pay INR6.5 billion
($138 million) for a 26% stake in UTI Asset Management Co., India's
fourth-largest asset manager, as the money manager continues to
expand its global investment-management operations.
T. Rowe is taking a stake in a company with assets under
management of $17.2 billion, or a 10% market share of the Indian
mutual-fund market, and just under 10 million accounts.
Chief Executive James A.C. Kennedy said the deal will enable T.
Rowe to tap the "tremendous growth potential of India's
asset-management industry." He added the country's high rate of
saving and demographics "favor strong growth in mutual- fund
investing over time."
Selling stakes of 6.5% each are government-run State Bank of
India (500112.BY), Punjab National Bank (532461.BY), Bank of Baroda
(532134.BY) and state-run Life Insurance Corp. of India.
The decision to involve T. Rowe as a partner comes after weak
market conditions forced UTI to abort plans for an initial public
offering in July 2008. The deal is likely to bolster UTI's position
in the crowded Indian asset-management business and help it better
pitch products overseas and provide assistance in fund
management.
"From a business angle, it makes sense to bring in somebody with
a global expertise and a strong financial muscle," said R.K.
Bakshi, an executive director at Bank of Baroda.
T. Rowe's third-quarter profit fell 13%, as the value of the
assets it managed remained below year-ago levels, despite the
recent stock-market rally, though results beat analysts'
expectations.
T. Rowe shares closed at $49.98 and didn't trade premarket. The
stock is up 41% this year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com
(Shikhar Balwani and Gurdev Singh Virk contributed to this
story)