KARACHI: The asset management subsidiary of Habib Bank Limited (HBL) will acquire 100% shares in PICIC Asset Management for Rs4.1 billion, a stock filing said on Tuesday.
Subject to regulatory approvals and the final share purchase agreement, HBL Asset Management will take over PICIC Asset Management, a subsidiary of NIB Bank with assets under management of approximately Rs24 billion.
Speaking to The Express Tribune, an official at HBL Asset Management said the firm’s assets under management amounted to about Rs22 billion. Its assets under management will increase to Rs46 billion following the completion of the transaction, thus making it one of the largest AMCs operating in the country.
Latest industry-wide data was not available on the website of the Mutual Funds Association of Pakistan (MUFAP) on Tuesday evening. However, market sources say HBL Asset Management will be one of the leading players in the asset management industry following government-owned National Investment Trust, Al Meezan Investment Management, MCB-Arif Habib Savings and Investments, UBL Fund Managers and NBP Fullerton Asset Management.
The overall size of the asset management industry at the end of March was Rs481.4 billion. This translates into a market share of almost one-tenth for HBL Asset Management in the post-acquisition scenario.
AMCs seek money from retail as well as institutional clients and then invest them in shares, bonds and government securities by setting up mutual funds with distinct investment strategies. AMCs generate revenues by collecting management fees that typically range somewhere between 1% and 2% of their assets under management. The official did not disclose the weighted average management fee charged by either of the two AMCs.
HBL Asset Management runs two equity funds, two money market funds, one income fund, one balanced fund and one capital-protected fund. It also runs two voluntary pension funds.
In contrast, PICIC Asset Management is managing six open-end funds and two closed-end funds with a clientele of 40,000 investors. Like its acquirer, PICIC Asset Management also manages two stock funds in addition to income and money market funds.
This means HBL Asset Management will have a few overlapping funds in major categories at least for some time. The official added that it would be pre-mature to state if HBL Asset Management would merge similar funds after acquiring PICIC Asset Management.