Mumbai, Nov 27: Life Insurance Corporation of India (LIC) plans to farm out a portion of its vast investible resources to outside fund managers. To start with, the corporation will farm out small lots of, say Rs 100 crore, to one or two fund managers on an experimental basis, highly placed insurance industry sources told The Financial Express.

The details of employing an external fund manager will be discussed and formulated at the next LIC board and investment committee meetings.

This follows the freedom given to LIC by the government to appoint outside fund managers or investment advisors both in India and abroad to deploy investments.

According to sources, many foreign asset management companies having a presence in India have already made presentaions to LIC on managing its funds. DSP Merrill Lynch Asset Management, the 40:60 joint venture asset management company of Merrill Lynch Asset Management LP, US, one of the largest AMCs in the world, and the investment bank DSP Merrill Lynch India Ltd, is said to be leading the pack.A UK-based finance major with interest in insurance and fund management is also said to have made presentations to LIC on fund management.

The move is expected to throw open competition among Indian asset management companies for a piece of the cake. "One of the major reasons for many foreign asset management companies to have decided to set up base in India was to get an early lead in bagging fund management mandates when the public fund management is opened for the private sector. Till now they have not been able to make much head way and without exception all of them are making losses on their investment in setting up the office infrastructure," said the chief executive of foreign- controlled AMC in India.

Many of these fund managers is reported to have made presentations to public provident funds and pension funds earlier -- in anticipation of liberalisation of their investment rules.

Till now over 15 foreign asset management companies have set up base in India, either in joint ventures with Indian partners or on their own. Some of the importnat foreign AMCs with Indian operations are Jardine Fleming, Morgan Stanley, Alliance Capital, Threadneedle, Templeton and Sun F&C.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.