The Hindu Business Line : DSP Merrill to invest 35% in BlackRock energy fund

Kolkata, Feb. 27 DSP Merrill Lynch (DSPML) would, for the first time, dip into BlackRock natural resources equity investment team’s expertise. The Indian asset manager has also been allowed to invest up to $200 million in a “closed” fund managed by it, as an exception.

Mr Anup Maheshwari, Executive Vice-President and head of equities & corporate strategy at DSPML, told Business Line that DSPML’s latest offer — Natural Resources and New Energy Fund — would be able to invest in the alternative energy fund, managed by the UK-based BlackRock team, which had stopped taking fresh money from investors last year.

“The fund, which has Suzlon in its portfolio along with 100 other international alternative energy majors, will be one of the two funds in which the new Indian fund would invest about 35 per cent of its total corpus,” he said. The other fund is called World Energy Fund, which has Reliance Industries in its basket along with 55 other global oil, gas and coal companies.

Market share

The BlackRock-managed two funds command 60 per cent market share in the global natural resources equity investments and in terms of returns, both have outperformed the MSCI World Energy Index and MSCI World Index in the past one-year period.

BlackRock is independent in ownership and governance even though, in terms of equity ownership, Merrill Lynch holds a stake of approximately 49.8 per cent (The PNC Financial Services Group retains an interest of about 34 per cent. Its employees and public shareholders hold some 17 per cent stake in BlackRock).

Linkages

BlackRock, however, has operational linkages globally with Merrill Lynch and through which market or product-specific cooperation percolates to Merrill Lynch network or its affiliates.

A more formalised linkage between DSP-ML and BlackRock in India would come about after the regulatory approval. Last month, DSPML sought approval from the RBI. It is expected that by the middle of this year a formal integration, including a probable insertion of BlackRock’s name in the Indian outfit, may be realised.

Last year, DSPML made its investment debut in the BlackRock-managed Gold Fund.

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