HDFC to float mutual fund

MUMBAI, NOV 1: After a long wait, Housing Development Finance Corporation (HDFC), the leading housing finance company in the country, has...

MUMBAI, NOV 1: After a long wait, Housing Development Finance Corporation (HDFC), the leading housing finance company in the country, has signed an agreement with Standard Life Investments (SLI) of the United Kingdom to launch a mutual fund in the country.

SLI, the investment arm of Standard Life Assurance Company (SLAC) group, will take a strategic stake of 26 per cent in the asset management company (AMC) and would be represented on its board. While major banks and financial institutions like IDBI and ICICI have already mutual funds, HDFC is the only institution

which has not floated any mutual fund so far. Although HDFC mooted the idea of a real estate mutual fund earlier, the concept failed to take off.

“The proposed HDFC mutual fund plans to offer a wide range of investment products to the retail as well as institutional investors in India and will be able to leverage on HDFC’s investment management expertise as well as its brand, distribution capability and existing client base,” HDFC said.

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InOctober 1995, HDFC had signed an agreement with SLAC for an insurance joint venture which was subsequently renewed. The SLAC group, which holds five per cent equity stake in HDFC, has already committed 20 million pound sterling in the Indian equity markets with HDFC as its Indian advisors. The proposed insurance joint venture would also draw on the investment management skills of the AMC.

SLAC has assets in excess of US $ 65 billion (Rs 4,60,000 crore) under management. The agreement for a joint venture mutual fund was signed by HDFC chairman Deepak Parekh and SLAC general manager (international) Alexander M Skinner.

The entry of HDFC into the mutual fund industry has come at a time when existing mutual funds are mobilising more funds in the current year. The total mobilisation of mutual funds in the three-month period April-September 1999 has gone up to Rs 19,381 crore from Rs 10,168 crore in the same period of last year.

Apart from the Unit Trust of India – the largest with assets under management ofRs 63,113 crore – there are six bank-sponsored mutual funds, four sponsored by financial institutions, six private sector mutual funds, seven joint venture funds and ten foreign-owned mutual funds. The total assets under management of 34 mutual funds work out to Rs 85,487 crore.