Apple AMC scouts for foreign ally; may let go of 35% stake
Aabhas Pandya
NEW DELHI, January 6: Apple Asset Management Company is on the lookout for a foreign partner. Although Atul Nishar, Apple group chairman, denied that Apple was holding deliberations with Canada Life Insurance for picking up a stake in its AMC, he said he was not averse to the idea of a tieup with a foreign partner."We are not holding negotiations with any foreign firm at present but foreign partnership is welcome since it is good for the fund," said Nishar. "If any international firm, including Canada Life Insurance is interested, they can talk to us," he added. Elaborating, Nishar stated that they would be comfortable if the foreign partner picks up a 30-35 per cent stake to begin with. "We will be comfortable with that kind of a level," he said. Fund analysts point that the trend is likely to accentuate in the fund industry. "As such, there are only a few funds left with a foreign tieup," said a fund manager. "Besides foreign expertise, tieups lead to capital infusion in fund-parched AMCs and help
attract the best brains in the industry. Another benefit is that the AMCs get the opportunity to handle the Indian allocation of funds by their foreign partner," pointed out a fund analyst. Apple Asset Management Company (AAMC) has a net worth of more than Rs 12 crore with an equity base of Rs 10.5 crore. Thus, the AMC is comfortably placed as far as the SEBI stipulation for a Rs 10-crore net worth is concerned. It may be pointed out that the market regulator had set a deadline of December 10, 1997, for all the AMCs to shore up their net worth to Rs 10 crore. This had resulted in the first merger move in the fund industry between HB AMC and Credit Capital AMC, with a net worth of Rs 5.25 crore and Rs 5 crore, respectively. The deadline has, however, been extended till the end of December 1998 with a rider that the AMC will not be allowed to launch any new scheme unless the stipulation was met. The year gone by has seen quite a few foreign partners hiking their stakes in Indian AMCs - the Soros Group
increased its stake in GIC AMC to 40 per cent and Zurich Insurance has acquired a 64 per cent holding in 20th Century Asset Management Company. Besides, calendar 1997 saw the launch of a number of funds from new joint ventures, including DSP-Merrill Lynch, Sundaram-Newton and ITC-Threadneedle. Apple Asset Management Company currently has two growth funds under its management - Apple Platinum and Apple Goldshare. While Goldshare is a close-ended fund, Platinum is open-ended. Goldshare currently trades at Rs 4.90, a 37.5 per cent discount to its net asset value (NAV) of Rs 7.83. On the other hand, Platinum has an NAV of Rs 5.95 with an entry price of Rs 6.13. While Platinum was launched in January 1995, Goldshare was launched in April 1997. As of March 31, 1997, the funds had a size of Rs 30.9 crore and Rs 38 crore, respectively.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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