Financial Daily from THE HINDU group of publications
Saturday, Apr 08, 2006
Financial Daily from THE HINDU group of publications Saturday, Apr 08, 2006 |
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Markets
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New Fund Offer Nilanjan Dey
The scheme To be benchmarked against BSE-100 index Minimum application amount is Rs 40 lakh
Kolkata , April 7 Reliance Mutual Fund has mooted an equity fund aimed at a single investor — a limited liability company set up in Mauritius whose name the fund has borrowed. The proposed Reliance Emergent India Fund will be benchmarked against the BSE 100 index. The fund, which will not offer a dividend option to the unit holder, will try to generate long-term capital appreciation from a diversified portfolio, composed mainly of equities. The open-end fund will have only one investor — Emergent, a company incorporated in September 2004 under the Mauritius Companies Act, 2001, the offer document filed with the Securities and Exchange Board of India has mentioned. Reliance Emergent India Fund, for which the minimum application will be Rs 40 lakh, will be free to take aggressive calls on the market by scaling equity exposure up to 100 per cent. This is probably the first instance of its kind where an equity fund of this nature has been actually named after the company (or its shareholders) that serves as its target audience. It remains to be seen how the regulator deals with the offer document.
SEBI's investor rule
The proposed fund, with Emergent as the sole investor, has sought to meet the key regulatory requirement of at least 20 investors in a very special way. The Mauritius-based company, the offer document has mentioned, will always have a minimum of 20 shareholders who are issued Class A shares. Also, no single shareholder will hold more than 25 per cent of the total issued capital under such shares. In fact, only Class A shares will be issued to those shareholders of Emergent intending to invest in the fund. The relevant SEBI norm requires each fund to have no less than 20 investors, with no single entity accounting for more than 25 per cent of the corpus.
More Stories on : New Fund Offer | Mutual Funds
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