Groww, Edelweiss Eye Acquisition of Prudential’s India Mutual Fund Business

From at least two local bidders, Prudential Financial Inc.'s India asset manager has received proposals. State Street Investment Management-backed Groww Asset Management Ltd and Edelweiss Asset Management have filed offers for PGIM India Asset Management Pvt Ltd, as per the current media reports. After witnessing little significant growth since acquiring the company from Deutsche Bank AG ten years ago, PGIM Inc. is trying to sell its losing asset management division in India. A settlement has not yet been reached; negotiations are still ongoing.

Why Global Asset Managers Eyeing for Indian Market?

In order to capitalise on India's ongoing equity growth, global asset managers are investing in the country. Earlier this month, Groww AMC acquired a minority position from State Street Investment Management. Similarly, Sanlam Emerging Markets (Mauritius) Ltd, located in Johannesburg, purchased a stake in Shriram AMC in May, while Westbridge Capital purchased a stake in Edelweiss AMC in August. PGIM's assets encompass equity, alternatives, real estate, and fixed income. The annual report of PGIM indicates that its after-tax losses in India increased to over 235 million rupees ($2.6 million) in the year ending March 2025.

Groww Under Scrutiny

Citing concerns about governance and transparency, proxy advice firm Institutional Investor Advice Services (IiAS) has recommended against all five resolutions put forth by Groww's parent company, Billionbrains Garage Ventures Limited. The stockbroker is requesting shareholder approval for changes to the founders' rights to designate board directors and the employee stock option (ESOP) plan.

The company's plan to revise and approve its ESOP Scheme 2024, which may give up to 331.5 million stock options, was rejected by IiAS in its voting advisory. The lack of clarity on the exercise price, which would be decided by the nomination and compensation committee, was brought to the attention of the proxy advice company. It made clear that the selections can have an excessively lengthy workout duration.

IiAS stated that there is no alignment between the interests of employees and investors if the stock options are granted at a substantial discount. liAS further pointed out that the option's exercise term may last up to 20 years from the date of vesting, and for ESOPs issued after listing, it may last up to 10 years. The cost of the option and the likelihood that it will be in-the-money can both be significantly increased by such an extended exercise time. The lengthy exercise period for ESOP systems is uncommon for businesses, it was added.