The Hindu Business Line : IDBI to pick capital markets arm for mutual fund foray

Mr Sushil Muhnot, Managing Director and CEO, IDBI Capital Marketing Services, addressing media at the launch of its online investment portal in Kolkata on Thursday - A. Roy Chowdhury

Kolkata , Nov. 24

IDBI Capital Market Services has been finally identified as the launch pad for IDBI Bank's proposed entry into mutual funds. The company, a 100-per cent subsidiary of the bank, will also be mandated to sell products of the insurance venture that IDBI is expected to promote.

IDBI Cap, which already distributes mutual funds, has been formally chosen to partner its parent's foray into asset management as a minority stakeholder, said Mr Sushil Muhnot, MD & CEO.

Insurance, which will be an altogether new effort by IDBI (it had been in the AMC business in partnership with Principal Financial not long ago), will be a more passive affair for the company, as it will not participate in equity. IDBI Bank incidentally may tie up with one or more partner for the proposed insurance venture; three or four names are said to have been short-listed.

IDBI Cap, to which IDBI's investment banking activities were transferred in 2004, further intends to serve as a pension fund manager. It has recently made a presentation before the newly formed pension regulator (PFRDA), citing its experience in the field. It is expected that more clarity will emerge on this front shortly.

The company manages roughly Rs 32,000 crore of pension and PF funds.

On another front, IDBI Cap plans to beef up its distribution business, especially with regard to mutual funds. It already vends funds to a number of institutional clients. The plan now is to tap new customer segments, including those on the retail side, the MD& CEO said.

Gets SBI mandate

IDBI Cap has been mandated as an arranger for SBI's forthcoming bond issue, Mr Muhnot said, adding that the company will act along with a number of other arrangers on the matter. Key details of the large-sized issue, which has the highest ratings, have already been made known. Part of it may be raised internationally.

The company plans to provide miscellaneous financial services in a big way. These will include stock trading, which is now being offered to retail customers through a new online portal (www.idbipaisabuilder.in) .

Among the features offered by the portal is one that enables an investor to sell shares on the next day without receiving delivery. This is expected to benefit those who are keen to take advantage of quick movements in stock prices.

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