Investments

Bank of Baroda announces merge of Mutual Fund arm with BNP Paribas

Bank of Baroda, a state-owned banking and financial services company, has announced it’s signing of a binding agreement with BNP Paribas Asset Management for a potential merger of Bank of Baroda’s mutual fund business.

In a stock exchange filing, the bank has revealed that it would be an all-stock deal, in which Baroda Asset Management India will merge with BNP Paribas AM; the companies of BNP Paribas Trustee India and Baroda Trustee India’s merge is currently pending regulatory approval.

Following the merge of the companies, Baroda will hold a 50.1% stake in the newly created entity, with BNP Paribas AM holding the remainder. In the merged trustee entity, Baroda would hold 50.7%, with the remainder being wholly held by BNP Paribas.

The merger will leverage on the depth of BNP Paribas’ asset management knowledge and experience in running Indian retail networks, thus facilitating the growth of Baroda’s mutual fund business. Greater business synergies and the creation of larger-scale business schemes are intended as a consequence of the merger.

The merged entity will also benefit from a stronger balance sheet, in addition to increased net worth which will allow the company to meet capital needs for growth and expansion. It will also strengthen relationships with intermediaries, improving distribution, thus broadening the entity’s coverage and outreach to customers, according to a report by liveMint.

As of March 2019, BNP Paribas was reported to have over USD1.42 million assets under management. Meanwhile, Baroda had over USD1.596 million AUM.