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Deutsche Bank is to sell its Indian asset management business to Pramerica Asset Managers for an undisclosed sum. The business, with $3.2 billion of assets under management, is not considered core to Deutsche’s regional plans, despite the bank’s claims that the Indian business has been a success and it is fully committed to the country.

Meanwhile Pramerica Investment Management (PIM), ranked among the top 10 institutional money managers in the world, has forged a joint venture with Dewan Housing Finance (DHFL) as another plank of its expansion into India.

For its part, Deutsche Bank is saying the disposal of its Indian asset management interests “is a continuation of [Deutsche’s] global initiative to further focus its business on developing and strengthening its regional centres of investment excellence”. The Indian business was established in 2003 and is now the second-largest foreign asset manager in India, after Franklin Templeton.

Ravi Raju, Asia-Pacific head of Deutsche Asset & Wealth Management, said: “We have built a strong brand with a well-respected investment and coverage team.”

The degree of spin being put on this – and the fact that Deutsche has attempted to contain the story by only issuing an announcement in India, makes me wonder what is at the heart of all this. Why is Deutsche so keen to sell the business off? Raju was not available to explain why the firm is selling up and its Indian PR guy said no further statements would be made. It’s called containment.

Deutsche’s surprisingly bullish tone in the face of a major backtrack was only compounded by comments from Ravneet Gill, CEO of Deutsche Bank India, who said: “We remain absolutely committed to further investment and development of our business here given that India is strategically important to the bank’s global growth aspirations.”

What we do know is that India is a tough place to build a business. Deutsche is by no means the first group to withdraw. In the last two years, UBS, Morgan Stanley, Fidelity, Macquarie, Daiwa, PineBridge have also withdrawn from the market. Raju says the regional strategy has been to build coverage in certain areas and exit others: “We were dabbling in a lot of sub-scale onshore businesses.”

Although some market players have said India’s asset management business shows promise, several things hold mutual funds back in India. One of them is regulation: managers are not actually allowed to address the assets of insurance companies or pension providers. A bigger challenge is the low level of investor awareness and a lack of traction in wealth management.

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