Deutsche Bank’s DWS to buy 40% stake in Nippon Life India’s AIF arm

DWS, the asset management arm of Germany’s Deutsche Bank, will acquire a 40% stake in Nippon Life India Asset Management’s alternatives unit to expand its alternative investment platform and global product reach.

Nippon Life India AIF Management (NIAIF), a wholly owned subsidiary of Nippon Life India Asset Management, will issue new shares to DWS in exchange for capital infusion, it said on Thursday. The two companies have signed a memorandum of understanding and the deal is subject to relevant regulatory approvals.

Through the partnership, the two companies plan to expand their product range and reach offshore investors using DWS’s global network. They will also launch passive products for the India and UCITS markets and co-develop actively managed, India-focused funds for global distribution. UCITS or Collective Investment Undertakings in Transferable Securities fund are investment funds sold across European countries. Indians can invest in them under the liberalized remittance scheme limit of $250,000 per year.

DWS chief executive officer (CEO) Stefan Hoops said: “India is one of the key growth markets for global asset managers for decades to come and has long been a strategic target for DWS. The anticipated deals address our three priorities: driving growth in alternatives and passive, delivering on our promise to leverage our strong partnerships in Asia and maintaining our ambition to be ‘top 5 in the top 5’.”

Sundeep Sikka, managing director and CEO of Nippon Life India Asset Management, said the partnership in passive strategies and global distribution will enable the company to offer world-class investment access to global and Indian investors.

NIAIF has raised nearly $1 billion in investor commitments in its 10-year track record. Nippon Life India Asset Management is India’s fourth largest asset manager with assets under management (AUM) of $85 billion and market capitalization of $6 billion. DWS’s AUM is $1.22 trillion.

Alternative investment funds raise funds from other investors to invest in companies or projects. Category I AIFs include venture capital and infrastructure funds, while private equity and debt funds come under Category II AIFs. Category III AIFs, such as hedge funds, have a higher risk appetite with aggressive investment strategies such as using algorithms for automated high-frequency stock trading.