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Tuesday, Jul 13, 2004

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Canbank MF wins race to acquire GIC MF

Nilanjan Dey

Kolkata , July 12

CANBANK Mutual Fund has beaten SBI Mutual Fund and LIC Mutual Fund to bag the asset management company promoted by General Insurance Co.

The strategic buyout will add over Rs 100 crore, spread over five schemes to Canbank mutual fund's asset base.

GIC Asset Management Co has accepted the offer placed by Canbank Mutual Fund to take over its schemes, Mr N.R. Ramanujam, Managing Director of Canbank Mutual Fund, told Business Line.

"The proposed acquisition is driven by our desire to widen our retail base. GIC Mutual Fund has around 1.2 lakh investors, who will add to our family of unit holders," he said.

For Canbank Mutual Fund, the deal brings an end to a long-drawn exercise marked by bids placed by the other two fund houses. Its assessment was based on a due diligence conducted by rating agency ICRA Ltd.

The price of acquisition is not being revealed at this stage. The transaction will be subject to clearances from the boards of GIC AMC and Canbank AMC. It will subsequently go to SEBI for approval.

GIC Mutual Fund, in which SC Management Co Inc of the US (an affiliate of the Soros group) has been a strategic investor, has recently concluded an elaborate restructuring exercise. This saw the closure of a couple of schemes on the debt side — GIC Debt and GIC Gilt. The liquid fund was also withdrawn. The mutual fund currently manages four open-ended products and a close-ended one. The first set comprises GIC Fortune '94, GIC Growth Plus II, GIC D'Mat and GIC Balanced.

The close-ended scheme, GIC Taxsaver '95, is expected to come up for redemption next year. Of the five, GIC Fortune '94 (NAV: Rs 12.65 as on July 9) is the biggest in terms of assets under management - Rs 49 crore.

Canbank Mutual Fund has, in recent times, aimed for a broader asset base, Mr Ramanujam observed. "The last one year or so has seen our assets move up substantially. We had about Rs 950 crore in March, 2003 and manage Rs 1,800 crore today. The GIC MF deal will help us grow even further," he said. The mutual fund itself has around a dozen funds, a few of them launched not very long ago.

The latest development comes after a year-long consolidation in the country's asset management industry. Some of the recent examples of mergers and acquisitions are SUN F&C Mutual Fund's acquisition by Principal MF and UTI MF's takeover of IL&FS MF.

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