Manulife Tie-up With Mahindra In India

With an eye on the growing interest in financial products like mutual funds and retirement plans, the Mahindra group has re-affirmed its focus in its asset management business with a new tie-up.

The financial services arm of the group, Mahindra & Mahindra Financial Services, through its subsidiary Mahindra Asset Management, has entered into a joint venture with Manulife, a Toronto-based firm providing wealth and asset management, and life insurance services.

The 132-year old Canadian firm managed assets worth $849 billion as of March 2019 and it operates largely in Asia, Canada and the U.S. (branded John Hancock). Anil Wadhwani, chief executive and president of Manulife Asia, said that the group has been operating in several developing Asian countries for decades. “Manulife is a leader in Hong Kong and second largest player in Indonesia,” said Michael Dommermuth, head of wealth and asset management-Asia, Manulife Investment Management.

Manulife, through its Singapore-based subsidiary, will bring $35 million in capital for a 49% stake in the joint venture, while the Mahindra group firm will hold the rest. As per regulator SEBI’s rule, since both the partners hold over 40% each, they will together be the sponsors of the all the schemes under the joint venture.

Having started operations in July 2016, Mahindra AMC is still a fledgling business, with assets under management (AUM) of just over ₹5000 crore as on January 2019. It fund manages ₹1800 crore of retail money while the rest comes from institutional investors. With Manulife’e expertise, Mahindra wants to expand its retail footprint substantially. Says Ramesh Iyer, vice-chairman and managing director at Mahindra Finance, “Our focus is going to be the middle India which turned traditionally to physical assets, cash and gold as their primary savings instruments.”

Iyer says that as returns from physical assets continue to show a falling trend, investors will shift their savings to financial assets. Manulife’s Dommermuth is also optimistic about the need for retirement funds in India. “There is a big scope of organic growth in the business,” he says.