Prajna Capital - An Investment Guide

JAPAN’S Nomura asset management company(AMC) has picked up a 35% strategic stake in LIC Mutual Fund for Rs 308 crore, valuing the seventh largest fund house at Rs 800 crore. This valuation amounts to less than 2.5% of the total assets under management of Rs 32,415 crore of LIC MF Asset Management Company ( AMC ) as on June 2009. The sale of 35% stake involves both fresh issue of equity and secondary sale. Following this agreement, LIC will hold 45%, and LIC Housing Finance 20%. Nomura will hold the balance 35% stake in the AMC. As a part of the deal, Nomura will bring in expertise in equity management — an area where LIC MF has lagged behind. “India is a very big market and there is a huge value in finding a local partner.By building on LIC’s outstanding brand image and customer network, we will be able to apply best practices to our combined business through our extensive experience as a global asset manager”, said Takumi Shibata,Deputy President and COO, Nomura Holdings. ...

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...