Overview of AMC Industry

Date : 26.12.2017

INDEX

1. Business understanding

2. Glossary

3. Total Saving and investment scenario

4. Evolution of industry

5. Industry Data and opportunity overview

6. Commission, Expense regulations and its data

7. Peer comparison

8. Risks

9. Sources of information

Business UnderstandingBusiness Understanding

11

Asset Management company :

An asset management company (AMC) isa company that invests its clients' pooled fundsinto securities that match declared financialobjectives.

GlossaryGlossary

22

Term Description

AAAUM Annual Average AUM

AMC Asset Management Company

AMFI Association of Mutual Funds of India

B15 Beyond Top 15 Cities

ELSS Equity Linked Saving Schemes

ETF Exchange Traded Funds

Mn Million (Ten Lakh)

Bn Billion (Hundred Crore)

Tr Trillion (Lakh Crore)

Glossary :

Total Saving and Investment scenarioTotal Saving and Investment scenario

33

20654

2232823313

2534226099

64267336

83219192

10825

0.80% 0.76%0.81%

0.78%

1.59%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

0

5000

10000

15000

20000

25000

30000

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

TREND OF FINANCIAL SAVINGS

Net Household Savings(in Bn.) Net Financial Savings(Bn) MF and Shares as a % of Net household savings

Evolution of IndustryEvolution of Industry

44

Year 1964-1987

-Establishment of UTI

-Monopolistic industry

-AUM Rs.6700 Cr in 1988

Year 1987-1993

-Entry of Public Sector MF

-First is SBI MF

- Excluding UTI, AUM of other 8 MF is around Rs.47,000cr

Year 1993-2003

-Industry opened for Private sector

-Fist is Kothari Pioneer

-33 MF houses with total AUM of 1.22 trillion in the end of 2003

Year 2003 onwards

-Healthy growth

-AUM stood at 19.5 trillion with total 41 MF houses

Evolution of Industry

Industry Data and opportunity overviewIndustry Data and opportunity overview

55

3.5

5.64.8

7.67 6.6

8.29.1

11.9

13.5

18.3

60%

-14%

58%

-8%-6%

24%

11%

31%

13%

36%

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0

2

4

6

8

10

12

14

16

18

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AUM DATA OF AMC INDUSTRY

AUM AUM GROWTH(%)

*Total 41 AMCs registered as on March,2017

1.98 2.18

4.66

0.11 0.03

3.73

2.84

5.34

0.15 0.02

4.21

3.21

5.9

0.2 0.02

6.09

4.18

7.83

0.460.2

0

1

2

3

4

5

6

7

8

9

EQUITY DEBT-LIQUID DEBT-OTHERS ETF OTHER(FOF)

AUM –PRODUCT WISE

2014 2015 2016 2017

2.43

2.37

2.11

1.95

1.57

1.37

0.92

0.82

0.64

0.61

0 0.5 1 1.5 2 2.5 3

ICICI Pru AMC

HDFC AMC

Reliance Nippon

Birla SL AMC

SBI AMC

UTI AMC

Kotak AMC

Franklin Templeton AMC

DSP BR AMC

IDFC AMC

AUM AS ON MARCH-2017(Rs. In Tr)

1062 1136665 627

555374

4045 6987

477 402

373 381

343

3842016 4188

1098 10381032 1083

578656 4907 8194

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ICICI Pru HDFC Reliance Birla SL SBI UTI Top 5 Total

Debt-Others Debt-Liquid Equity

CATEGARY WISE AMCs AUM IN DIFFERENT MAJOR PRODUCTS(IN BN.)

5.89

6.71

8.5

10.42

7.61

8.59

10.85

13.04

77%

78%78%

80%

76%

77%

77%

78%

78%

79%

79%

80%

80%

81%

0

2

4

6

8

10

12

14

March`13 March`14 March`15 March`16

Top 10 AMC AUM(in tr) Overall Industry AUM(in tr) Market Share of Top 10 AMC AUM

SITUATION OF TOP AMCs

AUM IN EQUITY SCHEMES (in Billion)

AMC Name T15% Market Share in

T15B15

% Market Share in B15

Total

HDFC 971 14% 191 15% 1162

ICICI Pru 957 14% 183 15% 1140

Birla SL 914 13% 180 14% 1094

Reliance Nippon 849 12% 142 11% 991

Franklin 465 7% 124 10% 589

Top 5 AMC 4156 60% 820 65% 4976

Total 6933 100% 1261 100% 8194

84.50%82.20%

15.50%17.80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Mar`14 June`17

T15 B15

PENETRATION OF FUNDS IN AMCs

YearAUM of Top 5

AMCsAUM of Next

5 AMCsAUM of Rest of

the PlayersTotal AUM of AMCs

Market share of Top 5 AMCs

Market share of Next 5 AMCs

Market share of Rest of the Players

Mar-13 4.31 1.97 1.89 8.17 52.75% 24.11% 23.13%

Mar-14 4.87 2.17 2.02 9.06 53.75% 23.95% 22.30%

Mar-15 6.6 2.76 2.53 11.89 55.51% 23.21% 21.28%

Mar-16 7.53 3.23 2.77 13.53 55.65% 23.87% 20.47%

Mar-17 10.43 4.32 3.51 18.26 57.12% 23.66% 19.22%

15%

67%

48%

76%

16%

85%

33%

52%

24%

84%

0%

20%

40%

60%

80%

100%

120%

Equity Debt-Liquid Debt-Others ETF Other

PRODUCT DISTRIBUTION

DIRECT PLAN REGULAR PLAN

Amount in Rs. In Trillion Mar`15 Mar`16 Mar-17 June`17

T15 AUM 10.21 11.36 15.49 16.38

Growth in % 11.26% 36.36% 22.98%

B15 AUM 1.9 2.19 3.09 3.54

Growth in % 15.26% 41.10% 58.25%

Total AUM 12.11 13.55 18.58 19.92

Growth in % 11.89% 37.12% 28.85%

3.14.1

5.2

7.8

5.8

8

8.4

10.8

0

2

4

6

8

10

12

14

16

18

20

2014 2015 2016 2017

DISTRIBUTION POSITION OF AUM

DIRECT PLAN REGULAR PLAN

44.80%

23.90%

41.10%

55.20%

76.10%

58.90%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

T15 AUM B15 AUM All India

PENETRATION OF FUNDS IN AMCs

Direct Regular

YEAR TOTAL INFLOW DEBT-LIQUID DEBT-OTHER EQUITY ETF

2013 0.8 0 0.9 -0.1 0

2014 0.5 0.2 0.4 -0.1 0

2015 1 0.1 0.1 0.8 0

2016 1.3 0.2 0.2 0.9 0.1

2017 2.2 0.1 0.8 1.1 0.2

NEW INFLOW OF FUND IN DIFFERENT PRODUCTS (in tr.)

PRODUCTS FOLIO COUNT(IN MN.) AVERAGE TICKET SIZE(,000)

2015 2016 2017 2015 2016 2017

EQUITY 33.68 38.52 44.38 110 110 142

DEBT-LIQUID 0.31 0.37 0.79 5216 5430 3982

DEBT-OTHERS 6.9 7.96 9.21 770 733 826

ETF 0.7 0.7 0.92 210 321 545

OTHER 0.15 0.13 0.11 165 156 159

TOTAL 41.74 47.66 55.4 259 259 317

7% 7%

9% 9%

12%

0%

2%

4%

6%

8%

10%

12%

14%

March`13 March`14 March`15 March`16 March`17

AUM/GDP RATIO IN INDIA

AUM/GDP Ratio

Global Australia USA France Genrmany Brazil UKSouth Africa

Korea China India

Debt AUM/GDP 25% 85% 38% 52% 24% 42% 25% 12% 23% 8% 7%

Equity AUM/GDP 30% 51% 66% 28% 35% 14% 29% 34% 7% 4% 3%

30%51%

66%

28% 35%14%

29% 34%

7% 4% 3%

25%

85%38%

52%24%

42%25% 12%

23%8% 7%

AUM/GDP RATIO OF DIFFERENT COUNTRIES

MF PENETRATION IN INDIA

State AUM IN JUNE 2017(Rs. In Trillion) AUM IN JUNE 2017(%)

Maharastra 8 40%

New Delhi 2 10%

Karnataka 1 5%

Gujarat 1 5%

West Bengal 1 5%

Top Five States 14 70%

Total 20 100%

Commission structure, Expense ratio data Commission structure, Expense ratio data and regulationand regulation

66

23.926

47.4

36.6

49.9

29 29

40

27 27

0

10

20

30

40

50

60

Mar`13 Mar`14 Mar`15 Mar`16 Mar`17

DISTRIBUTOR COMMISSION SCENARIO

Commission( in Billion) Commision(% bps of AUM)

Category Maximum Expense Ratio

Fund of fund 2.5% of daily net assets

Index fund or ETF 1.5% of daily net assets

Equity fund 2.5% for first ` 1 billion2.25% for next ` 3 billion2% for the next ` 3 billion

at 1.75% thereafter

Debt Fund In respect of a scheme investing in bonds such recurring expenses shall be less by at least 0.25% of daily net assets

Maximum expense ratio limit as per SEBI :

Over the years SEBI has tightened the regulatory guidelines for the mutual fund industry in order to improve transparency as well as safeguard theinvestor’s interest. In 2009, the entry load, which could be as much as 2% of the net asset value and was charged at the time of investment, was abolished.The entry load was used to fund the upfront commission paid to the distributors. Thereafter in September 2012, SEBI mandated that the exit load becredited back to the scheme. Furthermore, in order to promote mutual funds in smaller cities, SEBI allowed net of service tax fund houses to charge anadditional 30 bps in the total expense ratio (“TER”) should the new inflows from B15 cities be at least 30% of gross new inflows in the scheme or 15% of theaverage assets under management, whichever is higher. In the allowing year SEBI paved way for the creation of a direct plan by AMCs, for directinvestments (investments not routed through a distributor) and such plans were to have a lower expense ratio.

Trend in the Average Expense Ratio (in %):

Category Equity Diversified Equity Balanced Debt-Liquid Debt-Others

Year Regular Direct Regular Direct Regular Direct Regular Direct

2013 2.49% 2.01% 2.63% 2.12% 0.32% 0.19% 1.59% 0.96%

2014 2.52% 1.89% 2.68% 2.06% 0.33% 0.17% 1.53% 0.50%

2015 2.52% 1.73% 2.57% 1.74% 0.30% 0.11% 1.51% 0.84%

2016 2.51% 1.62% 2.52% 1.53% 0.27% 0.13% 1.45% 0.74%

2017 2.44% 1.55% 2.47% 1.30% 0.26% 0.10% 1.44% 0.72%

Peer ComparisonPeer Comparison

77

7.61 8.59 10.85 13.04

0.58%

0.64% 0.62%

0.70%

0.12%0.17% 0.16% 0.18%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0

2

4

6

8

10

12

14

March`13 March`14 March`15 March`16

PROFITABILITY OF AMC

Sector AUM(Rs. In Tn) Sector Revenue as a % of AUM Sector Profits as a % of AUM

Particular Mar`13 Mar`14 Mar`15 Mar`16

Total Op. revenue( In Bn.) 44.3 54.8 67 91.1

PAT(In Bn.) 9.2 14.2 17.8 23.1

% increase in Op. Revenue 13% 24% 22% 36%

% increase in PAT -3% 54% 25% 30%

PROFITABILITY OF AMCs

0.19%

0.24%0.22% 0.22%

0.12%

0.17%0.16%

0.18%

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

March`13 March`14 March`15 March`16

PROFITABILITY OF TOP 10 AMC COMPARE WITH INDUSTRY

PAT/AUM of top 10 AMC PAT/AUM of Industry

Performance of Top 5 AMCs

Particular ICICI HDFC Reliance Birla SBI

Mar`14 Mar`15 Mar`16 Mar`14 Mar`15 Mar`16 Mar`14 Mar`15 Mar`16 Mar`14 Mar`15 Mar`16 Mar`14 Mar`15 Mar`16

AUM(Rs. In billion) 951.67 1327.14 1670.54 1074.71 1458.62 1721.12 992.43 1245.07 1532.51 827.4 1071.78 1330.04 619.71 772.8 947.87

Market Share(%) 11.08% 12.23% 12.81% 12.15% 13.44% 13.23% 11.55% 11.47% 11.75% 9.63% 9.87% 10.20% 7.21% 6.66% 7.27%

Revenue(Rs. In Billion) 5.31 8.26 9.89 8.59 10.22 14.43 6.62 8.22 11.64 4.89 5.74 7.42 3.85 4.34 5.42

Revenue as % of AUM 0.56% 0.62% 0.59% 0.80% 0.70% 0.84% 0.67% 0.66% 0.76% 0.59% 0.54% 0.56% 0.62% 0.60% 0.57%

PAT (Rs. In Billion) 1.83 2.47 3.26 3.58 4.16 4.78 3.04 3.57 3.7 1.06 1.26 2.09 1.56 1.63 1.65

PAT as % of AUM 0.19% 0.19% 0.19% 0.23% 0.28% 0.28% 0.31% 0.29% 0.24% 0.13% 0.12% 0.16% 0.25% 0.23% 0.17%

Details on transactions in the mutual fund industry:

Acquirer Target Stake(%) YearAUM(Rs in

Billion)Estimated Deal

Value(in Rs. Billion)

Derived Valuation(in Rs.

Billion)

Derived Valuation(in % of

AUM)Societe Generale

Asset Management

SBI MF 37% 2004 56 1.61 4.35 7.77%

Robeco Canara MF 49% 2007 22 1.15 2.35 10.67%IDFC Standered Chartered 100% 2008 145.79 8.31 8.31 5.70%

Religare Lotus AMC 100% 2008 54.58 1.5 1.50 2.75%L&T Finance DBS Chola MF 100% 2009 30 0.45 0.45 1.50%

Nomura LIC MF 35% 2009 324.1 2.8 8.00 2.47%T Rowe Price UTI AMC 26% 2010 694.44 6.5 25.00 3.60%Nippon Life Reliance 26% 2012 842.99 14.5 55.77 6.62%L&T Finance Fidelity India 100% 2012 88.81 5.5 5.50 6.19%

Invesco Religare 49% 2012 146 4.65 9.49 6.50%HDFC MF Morgan Stanley 100% 2013 32.9 1.7 1.70 5.17%

Nippon Life Reliance 9% 2014 1288.88 6.57 73.00 5.66%Dewan Housing Premerica 50% 2014 20.6 0.24 0.48 2.33%

Nippon Life Reliance 14% 2015 1510.06 11.96 85.43 5.66%

RiskRisk

88

Risks

Economic Scenario

Alternative investment opportunity

Exit of KMPs

Regulatory changes

Retention of quality people

Source of InformationSource of Information

99

Sources of information :

•AMFI •RHP of Reliance Nippon •Mutualfundsindia•Various AMCs website and their disclosure

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