State Street in talks to buy stake in Indian mutual fund: Report

State Street Investment Management is in talks to acquire a stake in an Indian mutual fund as it seeks to tap into the nation’s $900 billion asset management industry, according to a person familiar with the matter.

The world’s fourth-largest asset manager will share its technology with the Indian firm to develop quantitative strategies, the person said, asking not to be identified as the discussions are private. Separately, State Street plans to offer model portfolios made of foreign stocks and exchange traded funds through local investment platform Smallcase, in which the asset manager already holds a stake, the person said.

A partnership with an Indian fund manager would give State Street, which has about $5 trillion in assets, an easy access to local investors in the world’s fourth-biggest equities market, where many foreign fund managers have struggled to crack distribution.

With the potential move, the investing giant would join the likes of Blackrock Inc., Amundi SA and Schroders Plc who are tapping the country’s vast retail investor base through domestic partnerships.

A spokesperson for State Street declined to comment.

Blackrock, along with its partner Jio Financial Services Ltd., recently came out with mutual fund products as it expects the industry to expand as much as threefold over the next seven years. Jefferies Financial Group Inc. is also gearing up to enter the country’s asset-management industry.

India’s equity markets have more than doubled to $5.3 trillion over the last five years, drawing millions of retail investors. Local mutual funds have drawn inflows from Indian households for over 50 straight months, driven by systematic monthly plans.