Reliance plans UK fund foray
India's No. 1 fund firm Reliance Capital Asset Management plans to sell its funds in U.K. from September and launch emerging market and Europe-focussed funds in the country by the next fiscal, a top official said on Thursday.
The firm, a unit of Reliance Capital Ltd, will also start an asset management business in Singapore in the next two years and expand in Gulf, where its presence is restricted to Dubai so far, Chief Executive Vikrant Gugnani said.
"We see a potential for India-dedicated funds not only in U.K. but also for central and eastern Europe," Gugnani, a former Citibank executive, told Reuters in an interview.
"UK will start off as advisory office but will gradually upgrade to a full-fledged asset management company," said Gugnani, whose firm's average monthly assets stood at 984 billion rupees in May.
A five-year bull run in the local stock market has lured overseas investors, despite a more than 25 percent decline in 2008, making distribution of India-dedicated funds in the international markets a lucrative business for asset managers.
More than 35 India-dedicated offshore funds registered for sale in the U.K. managed assets worth nearly $16 billion at the end of May, data from Lipper, a Thomson Reuters company, showed.
Global asset managers such as Robeco, part of Dutch Rabobank Group, and Britain's New Star Asset Management are also looking to offer India-dedicated funds.
Reliance Mutual Fund will add at least 84 branches and increase headcount by 40 percent in FY09 as it looks to attract retail investors from Tier I and Tier II cities to retain its position as India's largest asset manager.
The firm is also looking to expand in Gulf Co-operative Council locations such as Kuwait, Muscat, Egypt and Bahrain and evaluating options to start a representative office in the US, Gugnani said.
There were 169 India-dedicated offshore funds managing about $40 billion at the end of April, data from global fund tracking firm Lipper showed. About 23 of these managing more than $176 million, were launched in the first five months of 2008.
Reliance Mutual Fund, which managed 67 percent more money than its nearest rival ICICI Prudential at the end of May, has seen average assets jump more than 70 percent in the past year.
Its investor base has swelled to more than 6 million from 40,000 in September 2003. The firm plans to add 88 branches by September and hire 400 people, as it looks to add 4 million investors in FY09.
Gugnani said his firm is also evaluating options such as accepting cash as only 30 percent of Indians had bank accounts.
"There's a huge untapped parallel base which no body has addressed, even we haven't until now," he said, adding mutual funds received only 3-4 percent of India's savings and their assets is just about 14 percent of the country's GDP.