(Reuters) – Indian financial services group Religare Enterprises Ltd (RELG.BO) agreed to take a controlling stake in private equity firm Northgate Capital, as part of a $1 billion plan to build a global asset management business.
Northgate, with $3 billion under management, is Religare’s first U.S. deal and the Indian company is hoping to end the year with at least $60 billion to $65 billion of assets under management through further acquisitions, Religare Enterprises Chief Operating Officer Shachindra Nath told Reuters.
“If we happen to get a fixed income shop, we might cross 100 (billion),” said Nath, who was speaking on the telephone after an off-site meeting in the Indian city of Udaipur.
Religare, which plans to build out a multi-boutique asset management business, expects to announce its next deal, which will also be in the alternative investments space, in the next two months, Nath said.
Religare, which was founded by the family of Indian industrialist Malvinder Singh, is looking to buy controlling stakes in independent managers focused on a range of different asset classes, like equity, fixed income and private equity.
It has been hunting for deals in the United States over the last several months and was one of the finalists in the auction of American International Group Inc’s (AIG.N) asset management division last year. [ID:nSGE61202W]
The plan to spend $1 billion on strategic investments was approved by Religare’s board. The amount, which includes equity and debt, would be used mostly in the United States, Nath said, although they are looking at buying managers elsewhere as well.
California-based Northgate manages a series of venture capital and private equity funds.
Religare will take more than 60 percent in the company, while the management will retain the rest. The terms of the deal were not disclosed, but based on similar transactions, the deal could value Northgate at as much as about $200 million.
Northgate, founded in 2000, is looking to do more in emerging markets, and the deal gives it access to Religare’s resources, such as physical infrastructure and research capabilities.
“Religare brings a unique level of connectivity and insight into emerging markets that will enhance Northgate’s already strong capabilities in Asia and other high-growth emerging markets,” Religare Managing Director Matt Mongia said.
Religare’s founding family controlled Ranbaxy Laboratories (RANB.BO) until 2008, when the family agreed to sell its stake in the Indian drug maker to Japan’s Daiichi Sankyo (4568.T).
The family’s other interests include Fortis Healthcare Ltd (FOHE.BO) hospital chain, Super Religare Laboratories Ltd pathological laboratories and Religare Technova Ltd information-technology business.
The Northgate deal is expected to close in the first half of this year. Jefferies & Co and Religare Capital Markets Ltd were the financial advisers to Religare, while Credit Suisse advised Northgate. (Editing by Gerald E. McCormick, Andre Grenon and Steve Orlofsky) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)