T. Rowe Price Says Yes To India, No To China
January 22, 2010 6:40 AM
The US asset management company T Rowe Price (NASDAQ:TROW) has completed a 26-per cent stake acquisition in UTI, India's oldest and now fourth largest mutual fund company.
But T Rowe made it clear that it will not take part in the Beijing-based China Asset Management (China AMC) fire sale, though the company is very serious about its Asian expansion
Earlier this week, T. Rowe completed its purchase of its initial stake in India's fourth largest mutual fund company, UTI Asset Management Co., for 6.4 billion rupees ($140 million). This makes T. Rowe the single largest shareholder in UTI, but T. Rowe plans to eventually increase its 26% ownership, says the company's vice chairman, Ed Bernard.
"Like the rest of the world, there's a dramatic home bias in India. I don't anticipate Indian investors looking to buy stocks of the U.S. or other developed countries. I'm not sure why they would, because the developing economies are growing much faster. A lot of the world's alpha (investment return in excess of the broad market) will be created outside the U.S.," Ed said. Source
On the contrary, T Rowe Price said it is not interested in a China AMC stake. Citic Securities is under regulator's orders to reduce its 100% stake in Beijing-based China Asset Management (China AMC) to 49% or below by April. The China Securities Regulatory Commission gave China AMC a final warning to that effect on December 31 and will freeze approvals for new fundraising efforts by the asset manager until it happens.
Yet one obvious potential buyer of the stake is not interested. Todd Ruppert, president and chief executive of Baltimore-based T Rowe Price Global Investment Services, says he will not take part in the China AMC fire sale.
T Rowe Price is China AMC's partner in the Chinese firm's first overseas investment product. (China AMC still has an active advisory agreement with the US shop for its existing qualified domestic institutional investor (QDII) strategy. But it has since shifted its focus onto developing its own overseas investment capability.) Source
The firm is serious about its Asian expansion, but does not plan to buy itself into markets everywhere through mergers and acquisitions, Todd says. T Rowe Price is looking to step up its game in Asia. For example, it is in talks with regulators and investors about participating in the Taiwan market.
