DWS and Nippon Life India Asset Management plan to collaborate to bolster alternatives, passives and global distribution, subject to approval of the regulatory authorities.

European asset manager DWS, which manages €1,054 billion ($1225 billion) assets under management (AuM), and Nippon Life India Asset Management (NAMI), which manages $85 billion of AuM, plan to collaborate in the local market in alternatives, passive and active assets. Both companies announced yesterday that they have entered into a memorandum of understanding (MoU).

The terms of the MoU have been finalised but both parties have agreed to maintain confidentiality on the targeted price of the transaction and further financial details. The transaction is also subject to the approval of the relevant regulatory authorities.

Under the MoU, DWS plans to invest in Nippon Life India AIF Management (NIAIF) to scale up the alternatives business of Nippon India. With close to $1 billion capital commitments raised and a track record of 10 years, NIAIF is one of India’s leading asset managers for various categories of Indian Alternative Investment Funds (AIF). It is still in the early stages of growth and, so far, has built an alternatives product suite incorporating private credit, listed equities, real estate and venture capital. With the proposed JV it plans to expand its product suite and coverage to offshore investors through DWS’ global reach. DWS plans to acquire a minority stake of 40 per cent in NIAIF.

The investment underscores DWS’ confidence in the structural growth of India’s alternative-markets ecosystem and the track record of Nippon India in managing alternative strategies. The firm believes that India's alternative asset management market is poised for strong growth in the coming decades, driven by robust economic growth, increasing participation from domestic and foreign investors, diversification needs, favourable regulatory environment and government support.

In this environment, AIF structured funds, introduced in India in 2012, have amassed nearly €148 billion in gross capital commitments. This segment is projected to expand at an impressive ~32 per cent compound annual growth rate (CAGR), reaching about €600 billion over the next five years. Historically, AuM in this category has grown at an annual rate of about 28 per cent between 2019 and 2023, the firm continued. With the planned joint venture, both firms aim to build a globally-benchmarked, scalable alternatives platform, enabling Indian and international investors to participate in India’s long-term alternatives growth story.

As part of the MoU, DWS and NAMI also envisage establishing a cooperation to jointly launch passive products for the Indian and for UCITS markets, using each party’s passive capabilities across the value chain. They also aim for a global distribution arrangement to develop and distribute actively managed mutual funds with India-focused strategies through DWS’ global distribution network.

This planned collaboration represents a long-term partnership combining NAMI’s India investment expertise along with its established investor network in India with DWS’ expertise in passive and alternative investments. Both firms aim to use each other’s strengths in knowledge sharing, global best practices, and mutual understanding of global and Indian markets.

“India is one of the core growth markets for global asset managers for the next decades and has long been a strategic ambition for DWS,” Stefan Hoops, CEO of DWS, said. “The envisaged agreements tackle three of our priorities: drive growth in alternatives and passive, deliver on our promise to leverage our strong partnerships in Asia, and pursue our ambition to become ‘top five in top five’.”

“Alternatives is the next big opportunity in India’s asset management landscape and with this collaboration we will further strengthen our alternatives platform,” Sundeep Sikka, ED and CEO of Nippon Life India Asset Management, added.

“India is a key market for Deutsche Bank since we opened our first office there in 1980,” James von Moltke, president and chief financial officer of Deutsche Bank and responsible for the asset management segment, said.