Financial Daily from THE HINDU group of publications
Sunday, Dec 14, 2003
Financial Daily from THE HINDU group of publications Sunday, Dec 14, 2003 |
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Mutual Funds Markets - Mutual Funds Soros plans to buy out GIC in mutual fund
Nilanjan Dey
Kolkata , Dec. 13 THE global investor, Mr George Soros, has proposed to buy out General Insurance Corporation (GIC) and its associates' majority stake in GIC Mutual Fund. A proposal to this effect was presented to the GIC MF board recently. Soros Fund Management, 40 per cent shareholder in the asset management company through SC Management Co Inc., is willing to take over the entire 60 per cent stake held by GIC and others. The proposal has underlined to determine the correct valuation for the AMC's shares. SC Management is represented on the board by Dr Purnendu Chatterjee, known better in India for his long association with Haldia Petrochemicals Ltd. GIC, for which mutual funds are not a core business, would be willing to consider the offer favourably, if all terms and conditions are found suitable, maintained sources aware of the plan. The next step would be to appoint a consultant to work out the valuation. The consultant would play a key role before fresh talks materialise. When contacted, Mr P.B. Ramanujam, Managing Director of GIC, confirmed the development. "We hope to pursue the dialogue (with Soros) actively," he said, while refraining from divulging further details. If implemented, the proposal would give Soros a firm foothold in the asset management industry in India. Mutual funds — there are over 30 of them at present — now manage well over Rs 1 lakh crore. The proposal would also bring to an end an extended search for the best solution for the AMC. GIC has for long tried to restructure the asset management venture in order to make it more growth-oriented. The mutual fund, it may be mentioned here, was sponsored in the early 1990's by GIC and four public sector insurers. As on November 30, 2003, it managed assets of Rs 273 crore, which is relatively small when compared to some of the leading players. The MF manages a number of equity and debt schemes, the better-known ones being GIC Fortune 94 and GIC D'Mat. Both have improved their performance in recent times, propelled by a North-bound equity market. Sources, however, admitted that the mutual fund industry has lately started doing well in terms of performance and the GIC MF's products have also shown some improvement. "The MF, nevertheless, may still decide to opt out as we feel that GIC may not be fully equipped to run a mutual fund", they added.
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