In the wake of engineering behemoth Larsen & Toubro taking over DBS Cholamandalam Asset Management Ltd (DCAM) through its arm L&T Finance Ltd for Rs 45 crore in September, 2009, changes will be happening that investors need to keep a track of.
All regulatory approvals have been taken from authorities (December 23, 2009 from SEBI), and now DBS Chola Mutual Fund will be renamed as L&T Mutual Fund, while DCAM will be renamed as L&T Investment Management Ltd, while DBS Cholamandalaam Trustees Ltd will be renamed as L&T Mutual Fund Trustee Ltd.
The full responsibility of management, administration and trusteeship of the schemes and assets too will fall into the realm of the new entity.
Also subject to change will be the names of the various schemes, with L&T replacing the pre-fix DBS Chola on all schemes.
The fund house is offering its unit holders a chance to exit at applicable net asset value (NAV), without paying any exit load from January 15, 2010 – the offer is valid for one month after that date.
However, the exit option shall not be open for those unitholders whose investments have not completed the statutory lock-in periods under Section 80C of the Income Tax Act.
Also, unitholders of DBS Chola Infra Fund and DBS Chola Smallcap Fund, which are close-ended, will have to pay an early exit charge equivalent to the unamortized new fund offer expenses, if the withdrawal is before the 3-year period from the date of allotment.
The fund house has also intimated that there will not be any fundamental changes to the ongoing schemes, including investment objectives.
DBS Cholamandalam was formed in 1996 and has over 200,000 customer accounts. The AMC was a joint venture between the Chennai-based Murugappa Group and Singapore's DBS Bank.
L&T had taken over the AMC after paying Rs 45 crore for just 1.56 per cent of its assets in August, which were then at Rs 2,893.16 crore. As of December 31, 2009, the assets are Rs 2,901 crore.
Cholamandalam AMC had reported a loss of Rs 38 crore for the fiscal ended March, 2009.
The intent, by L&T was to effect greater synergies in its own financial services business. L&T has two wholly-owned subsidiaries in the form of L&T Finance and L&T Infrastructure Finance, servicing mainly the construction equipment finance and commercial vehicles as well as tractors segment. Their asset size was then reportedly Rs 9,000 crore
