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Aabhas Pandya
New Delhi, Nov 11: Unit Trust of India's Monthly Income Plan '98 (IV) is likely to mobilise a little over Rs 700 crore. This will mean a substantial drop in collections compared to MIP '98 (III), which had garnered over Rs 1400 crore in August this year. MIP '98 (IV) closed for subscription on November 11. ``We have mobilised Rs 530 crore from over 1 lakh investors till 2-3 days back and collection figures from our centres across the country are coming in,'' said Basudeb Sen at UTI.
Sources in UTI revealed that the scheme was likely to get another Rs 200 crore on the last day, which will take MIP collections to around Rs 730 crore. ``Some bulk applications are lined up for the last day since the scheme does not offer any early bird incentives,'' an official pointed out.This will be the lowest collection under the MIP series this year. All the four MIPs in 1998 have offered a coupon of 12.5 per cent under the monthly income option which translates into an annualised return of 13.25 per cent. While the firsttwo MIPs mobilised over Rs 900 crore each, MIP '98 (III) was a roaring success with collections of over Rs 1400 crore.
Collections in MIP '98 (IV) seem to have been hit due to a host of reasons. Sources in UTI concede that the US '64 scare among investors did have an impact on investors. ``Retail segment was bit jittery but we have still managed good collections from retail investors.''
``Despite all the hiccups, collections are still decent but unlike in the past when investors put their money blindly in UTI schemes, they have become apprehensive after the US '64 fiasco. What may be a cause of concern among certain investors is the 20 per cent equity exposure in MIPs,'' said an analyst. ``There also seems to be a fatigue for monthly income plans after the previous one collected more than Rs 1400 crore,'' said a debt market analyst. The ICICI issue had also offered the monthly income option with a coupon of 13 per cent, 50 basis points more than UTI's MIP..
Besides the controversy surrounding US '64,what seems to have dampened collections is that the Rs 900-crore odd redemption from US '64 in October could not be channelised into MIP. ``Very few investors exercised this option,'' said a market participant involved with the marketing of the issue.The inflow into MIP '98 (IV) was also hit by the initial offer of IISFUS '98 (II), which opened on November 2. Clearly, a number of institutions and corporates would have held back their investments in MIP since IISFUS at 14 per cent offers 150 basis points more than MIP's 12.5 per cent.
The MIP series offers monthly, annual and cumulative options. Over the last few years, US '64 and assured return schemes like MIP and IISFUS have been the only schemes to attract investments. In fact, of the 12 assured return schemes of UTI under Development Reserve Fund (DRF), seven schemes faced a gap of Rs 111 crore with their net income falling short of the income distribution during 1997-98. These schemes included MIP 97 (I), MIP 97 (II), MIP 97 (III) IISFUS 97 (I), IISFUS97 (II), IISFUS 98 (I) and MIP 98 (I). Even in the case of MIP 98 (II), the shortfall was Rs 5.6 crore in a matter of few months.
ICICI raises Rs 400 crore
The fourth tranche of ICICI's safety bonds has barely managed to mobilise Rs 400 crore and thus failed to make any collections under the green shoe option of another Rs 400 crore. Despite repeated attempts, ICICI officials could not be contacted to confirm the figures. However, lead managers of the issue disclosed that the financial institution had barely managed to collect around Rs 410 crore. `The `Retail response was not exactly lacklustre but there was limited interest in bonds with section 88 benefit and the regular income option with offered 13 per cent per month,'' said one of the lead managers. Mobilisation under successive tranches has been on a decline. In April, 1998, collections were Rs 422 crore of the total size of Rs 600 crore (Rs 300 crore plus Rs 300 crore), which touched Rs 504 crore in July, 1998 (again Rs 600 crore). InAugust, 1998, collections dropped to Rs 417 crore of the total issue size of Rs 600 crore.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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