BSE eyes AMFI's MF utilities platform

MUMBAI: It's the first sign of consolidation in the mutual fund distribution space. BSE, which runs the segment-leading StAR MF fund distribution platform that has a 85% marketshare in the organised distribution space, is in talks to acquire MF Utilities, fund industry trade body AMFI's platform for an undisclosed amount. A proposal for a joint venture with BSE is the second possibility that has been floated.AMFI has set up a four-member team with CEOs from fund houses to take these proposals forward, sources said.
Currently BSE StAR MF, with a turnover of nearly Rs 20,000 crore during the April-June period, is the leader in the space. In comparison, MF Utilities, which was started in early 2015, has clocked a turnover of Rs 100 crore in the last 18 months. The other player in this space is FinNet, which was started by registers for the fund industry CAMS and Karvy. NSE, the largest stock exchange in the country by turnover, has a 45% stake in CAMS.
According to Leo Puri, chairman, AMFI, while various proposals have been made, including from BSE for a joint venture, AMFI is committed to growing and developing MF Utilities as a strategic asset for the industry. A BSE spokesperson, however, declined to comment on the development. A spokesperson for MF Utilities said he was not aware of the development.
As of now 25 of the 41 mutual funds, including the industry leaders ICICI Prudential MF, HDFC MF, Reliance MF, Birla Sun LIfe MF, SBI MF and UTI MF, are partners in AMFI's MF Utilities. Among the major players, LIC MF is not part of the platform. So far founding members have been taking care of the costs. However, one of the main issues being discussed among these members is how to admit new fund houses into the platform and at what costs. The slow pick up in turnover has also been a matter of concern for the members.
Industry sources said that for BSE, the move to acquire MF Utilities makes sense since it gives the bourse 'ready-made access to product manufacturers', meaning direct relationships with fund houses.