J.P. Morgan is in talks to sell its India-focused real estate funds, but says it remains committed to real estate in the Asia Pacific region.

The U.S. banking giant is planning to sell two of its India-focused private equity real estate funds to Apollo, a private equity firm, for a nominal amount. J.P. Morgan decided to sell after failing to scale up to the size it wanted, according to the «Business Standard» (behind paywall). 

The New York-based bank follows a move by other global banks who have exited their mutual fund businesses in India due to competitive returns offered by local fixed deposits and competition from local players with deeper networks.

For Apollo, the opposite strategy applies – purchasing the J.P. Morgan funds signals further expansion of its footprint in India. The private equity firm first has been in Asia for ten years.

Funds Involved 

The two funds involved in the most recent deal are J.P. Morgan India property fund (JPIPF) and J.P. Morgan India property fund II that closed on $300 million and $155 million respectively, based on data from PERE (requires registration). 

The Firefighters' Retirement System of Louisiana has a stake in JPIPF valued at $8.9million as at May 2018, according to its investment update. In the pension fund's report card, the JPIPF returned -12.2 percent since inception. 

Meanwhile, J.P.Morgan's commitment to Asian real estate outside of India was signalled by the appointment of Kenneth Tsang, an industry veteran, as its managing director for real estate Asia Pacific. The bank's Asia-Pacific Property Fund also received US$250m commitment from the California Public Employees Retirement System in the same year, as reported by «IPE Real Assets».

Banks Retreat from India's Fund Space...

Two years ago, J.P.Morgan sold its mutual fund business in India, with 7, 000 crore ($51.5 billion) of assets, to Edelweiss Asset Management. In the transaction, Edelweiss acquired all onshore fund schemes operated by JP Morgan Asset Management India. 

In 2015, Goldman Sachs sold its mutual fund business in India to Reliance Capital Asset Management in 2015, while Morgan Stanley sold its mutual fund business to HDFC Mutual Fund. 

...While Apollo Bulks Up

Apollo came by Indian real estate assets through its 2010 acquisition of Citigroup's real estate investment division. In 2016, the company reportedly invested $2.9 billion in Logix Group, a developer in Noida. 

According to 2017 data from Pitch Book, Apollo had set up the largest private equity vehicle on record last year. Its Apollo Investment Fund IX closed on $24.7 billion.