The Securities and Exchange Board of India (Sebi) has awarded many partial and final approvals in recent months, allowing a slew of new mutual fund (MF) firms to enter the Rs 68-trillion market by 2025.
There are currently at least six candidates who either hold a licence or have received in-principle approval. While Angel One and Unifi Capital have been granted final licenses, four applications — Jio BlackRock, Capitalmind, Choice International, and Cosmea Financial Holdings — have gotten in-principle permission.
The Sebi in-principle clearance is the regulator's go-ahead to start the mutual fund business, which entails putting infrastructure in place and employing essential individuals. Sebi inspects development after six months. If all of the criteria are met, the applicant will receive the final licence.
If all four applications given in-principle permission are successful in launching their initial funds this year, a record six fund houses will be in operation by 2025. In 2023, five new names entered the mutual fund business, three of which were acquired.
In addition, IndusInd International is likely to complete its acquisition of Invesco MF this year.
In recent years, as investor interest in mutual funds has grown, a number of new firms have entered the market. New entrants include portfolio management services (PMS) companies, fintechs, financial services distribution companies, and other financial services enterprises.
Some of the players granted in-principle approval are roughly halfway through their six-month preparation period. The Jio BlackRock asset management business (AMC), one of the most anticipated fund houses, has recently appointed George Heber Joseph as its chief investment officer (CIO). Hiring an experienced CIO is one of the requirements for obtaining an MF licence.
While some new entrants, such as Jio BlackRock, are expected to focus on all segments of the mutual fund business — active, passive, and smart-beta — and offer products across the equity, debt, and hybrid space, others intend to stick to one segment or devote the majority of their efforts to a single category.
Angel One MF will solely provide passive funds.
Capitalmind and Cosmea Financial Holdings, two of the players seeking a final license, have announced that they intend to specialize on factor and quantitative investing.
"With our investment in cutting-edge technology and partnerships with global leaders such as WisdomTree, we hope to reinvent investment solutions for Indian investors. Our focus on quant and smart-beta strategies will provide innovative and data-driven approaches to wealth creation," said Sam Ghosh, Cosmea Financial Holdings' founder and chairman.
