The fund management arm of UBS, whose parent was hammered by billions in subprime losses, hopes to enter high-growth India by the end of 2009, the only major Asian market where it lacks a presence.
The firm is considering entering through a start-up, joint venture or acquisition, though the latter route may be too pricey to pursue, said Christof Kutscher, head of Asia Pacific for UBS Global Asset Management.
"Prices in India for asset management companies have been crazy in recent deals. I would not be at all willing to pay the price that has been paid recently in some acquisitions," he said in an interview yesterday.
"There are better ways to go into India these days than by acquisitions. I would say acquisition is the lowest probability."
In December, UBS called off a $118 million deal to buy Standard Chartered's mutual funds management business in India after the purchase agreement expired before it won regulatory approval. The price jumped to $205m by March when Standard Chartered announced it would sell the business to Infrastructure Development Finance.
The average assets under management (AUM) of Indian mutual funds hit a record high during May of more than 6 trillion rupees (Dh514 billion), a 56 per cent rise from a year earlier.
Kutscher noted UBS recently won approval to open a retail bank branch in India, which will allow it to grow its wealth management business there. He said it would make sense for the fund management arm to also be there to support the initiative with its products.
While overshadowed in the past year by problems at its parent firm, UBS Global Asset Management has remained one of the world's largest fund managers with $770bn of invested assets at the end of March.
About $88bn, or almost 11 per cent of that was sourced from the Asia-Pacific region. That excludes assets in partially owned joint ventures such as its Shenzhen-based UBS SDIC Fund Management business in China.
Kutscher said he would like to see Asia's share rise to between 15 and 20 per cent in the next three to five years as the firm pushes to become a top 10 player in its target markets in the region. It achieved that goal in South Korea last year through an acquisition that created UBS Hana Asset Management.
The German executive said he is particularly keen for the profitable Asia-Pacific operation to expand sales of higher margin products, such as real estate, infrastructure and private equity and hedge funds. "Investors are always interested in how much in assets we have here. I find that a rather misleading indicator. We could easily pump it up with index and by money market funds," he said.