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| Nomura AMC acquires 35% stake in LICMF AMC, LICMF Trustee |
LIC Mutual Fund Trustee Company Private Limited (LICMF Trustee) and LIC Mutual Fund Asset Management Company Limited (LICMF AMC) leading Mutual Funds and Mutual Fund Asset Management Companies in India, respectively, are pleased to announce the induction of Nomura Asset Management Co., Ltd. as a strategic partner in India. Nomura Asset Management Co., Ltd., will acquire a 35% stake in LICMF AMC as well as in LICMF Trustee. The parties have signed an agreement today (July 11, 2009) for this purpose in Mumbai in the presence of Mr. Takumi Shibata, Deputy President and COO, Nomura Holdings, Inc., Mr. Atsushi Yoshikawa, President and CEO, Nomura Asset Management Co., Ltd.(Nomura AM), Mr. T.S.Vijayan, Chairman, Life Insurance Corporation Of India and other senior executives of LIC, Nomura AM, LIC Housing Finance Ltd, GIC Housing Finance Ltd, LICHFL Care Homes Ltd., and Nomura Financial Advisory and Securities(India) Private Limited( Nomura India).
Established in 1989 by Life Insurance Corporation of India (LIC), India's largest life insurer, LIC Mutual Fund is one of the oldest mutual funds in India. In 1994 LIC Sponsored the Jeevan Bima Sahayog Asset Management Company, subsequently renamed as LIC Mutual Fund Asset Management Company in 2006.
LICMF AMC had Rs.32,414.92 crore of Average Assets Under Management (AAuM) for the month of June 2009 as compared to Rs.18,633.46 crore a year ago. The AAUM of LICMF AMC have increased substantially from Rs.11,684.30 crore in November 2008. With these assets under its management LICMF AMC is ranked 7th in the Indian asset management industry with a 4.8% market share.
The Life Insurance Corporation of India is the largest life insurer in India managing investments of about Rs.8,03,970 crore and individual life insurance policies of over 200 million and until recently was the only provider of life insurance in India.
The formation of the joint venture is subject to necessary regulatory and unit-holder approvals, which the partners will be seeking in due course.
Commenting on the announcement, Mr. Atsushi Yoshikawa, President and CEO of Nomura Asset Management, said: "India is one of the fastest growing markets for asset management in Asia and is key to Nomura¡¯s push to be a world-class asset management firm with a strong competitive advantage in Japan and Asia. 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".
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| LIC MF sells 35 pc stake to Nomura, makes it strategic partner |
MUMBAI: LIC Mutual Fund on Saturday said that it has taken on-board Japanese asset management
company Nomura as a strategic partner by selling a
35 per cent stake to it.
"Nomura has joined LIC Mutual Fund as a strategic partner by taking a 35 per cent stake in LIC Mutual Fund AMC," Life Insurance Corporation
of India Chairman T S Vijayan told reporters here.
The shareholding pattern of the new company formed would be- LIC 45 per cent, LIC Housing Finance 20 per cent and Nomura 35 per cent, he said.
LIC Housing Finance last month diluted its holding in LIC Mutual Fund by selling 19.3 per cent of its stake for Rs 137.5 crore to Nomura.
LIC Mutual Fund's other stake-holder GIC Housing Finance, which held a 11.2 per cent stake, also exited the firm at a valuation of Rs 89 crore.
At the time of the stake-sale, the valuation of LIC Mutual Fund was Rs 800 crore, LIC Mutual Fund Chief Executive Officer Sushobhan Sarkar said.
The new joint venture would launch customer-centric products, he said.
"LIC and Nomura would launch a series of customer-focused products in the Indian market. Probably, we would also be able to collect money from off-shore and finance it," Vijayan said.
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| Budget expectations of the mutual fund industry |
Budget expectations of the mutual fund industry
D. Murali
Chennai: In recognition of the important role of the mutual funds (MFs) in mobilising savings, the avowed policy of the Government has always been to provide complete tax exemption to the equity fund vehicle, with no taxes being levied both on the asset accretion stage and at the time of distribution of returns to the investors. However, the introduction of Securities Transaction Tax (STT) upset the apple cart for MF investors in the equity schemes and created anomalies in the taxation dispensation applicable to such investors, rues Amit Bherwani, a senior tax professional in Ernst & Young.
The MF industry has come a long way with the total assets under management by the industry currently pegged at over Rs 6 lakh crore as per a recent report, he informs, in the course of a pre-Budget email interaction with Business Line.
“MFs channelise long-term savings into equities and provide the small investors a safer route for participation in the equities market. But, there are some anomalies that the industry expects the Finance Minister to clarify, during this Budget.”
Excerpts from the interview.
On STT.
The tax-induced distortion through STT levy needs correction. While, on the face of it, the levy of STT at 0.25 per cent on one leg (redemption) of the transaction by a MF investor may appear to be on par with the STT levy at 0.125 per cent on both the buy and sell legs of transaction put through by a direct equity investor, a closer look will clearly show that there is no parity, and that the MF investor is actually in a tax-disadvantaged position.
This is because MFs at the first instance pay the STT at the time of purchase and sale of securities from the equity market. Further, when the investor redeems his investment, there is again a 0.25 per cent STT levied on the redemption.
Thus, far from encouraging small investors to channelise their savings by investing in equities through MFs, the two-stage STT levy actually discourages an investor to take the MF route.
Consider the distributions by an equity fund, which are exempted from Dividend Distribution Tax (DDT) on account of the fact that the dividends received by the fund have already suffered DDT. On the same analogy, when the MFs themselves have already paid STT while transacting in equities on behalf of the investors, there is no reason why the MF should be further subjected to STT levy at the stage of redemption of units by the investors.
On DDT exemption.
As noted earlier, the equity-oriented mutual funds enjoy complete exemption from the levy of DDT on the distribution made to the investors. However, as per the existing definition of an equity fund, it is applicable to only those funds that have a direct 65 per cent investment in the domestic companies.
While this does benefit a majority of the equity fund schemes, two niche segments – the Fund of Fund (FOF) scheme and the overseas equity scheme – do not qualify for the exemption. The former because it does not have a ‘direct’ investment in domestic equities, but instead invests in other equity schemes, and the latter because it does not invest in ‘domestic’ equities.
Given that both FOF schemes and overseas equity funds are tailored to offer risk-diversification avenues to the investor, which is one of the fundamental objectives of a MF investment, there is a fair case for including the above categories of schemes for the DDT exemption.
On REMFs.
Traditionally, gold and real estate have been the two most-aspired asset classes for the Indian investor community. While we have seen the launch of Exchange Traded Funds in gold, which provides an alternative, hassle-free ‘dematerialised’ option for investing in gold, a collective investment option for participating in the real estate sector is still missing from the scene.
The SEBI has initiated the right moves to introduce guidelines for the Real Estate Mutual Fund (REMF) product; unfortunately, this initiative has not made much headway on account of various reasons, among them being uncertainties around the tax treatment of REMF.
An initial indication that REMF would be treated on par with equity fund has not been followed-up with the necessary amendment to the tax law. This year’s Budget may hopefully clear the tax uncertainty hurdle, to pave the way for the launch of REMF schemes in India.
**
InterviewsInsights.blogspot.com
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| SBI MF revises exit load structure of two schemes |
SBI Mutual Fund has revised the exit load structure for Magnum Income Fund, SBI Short Horizon Fund-Short Term Fund under the growth, dividend, and bonus plan of Magnum Income Fund and retail plan of SBI Short Horizon Fund-Short Term Fund. The changes will be with effect from January 1, 2009.
As per the revision, the exit load of 1% will be charged for investments up to and including Rs 1 crore if redeeming within 6 months from the date of investment. Along with this, exit load of 0.50% for exit after 6 months but before 12 months from the date of investments. However, no exit load will be charged for the redemption done after 12 months, with effect from 1 January 2009. For investment amount above Rs 1 crore, exit load will be nil. Presently, there is exit load of 0.50% for investments up to Rs 50 lakh, for redemption within 6 months from the date of investments and nil for investments above Rs 50 lakh.
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| UTI MF declares dividend under Short Term FMP |
UTI Mutual Fund has announced dividend under dividend option of UTI Short Term Fixed Maturity Plan-Series I-X (90 days) and will be offered for both retail and institutional plan. The record date for the same is January 05, 2009. The quantum of dividend will be 100% of distributable surplus available on the record date on face value of Rs. 10 per unit. The NAV of retail as on 26 December 2008 was at Rs 10.2567 per unit and institutional plan was at Rs 10.2599 per unit.
UTI Short Term Fixed Maturity Plan-Series I-X is a close-ended income scheme with an objective to generate regular income by investment in a portfolio of fixed income securities normally maturing in line with the time profile of the plan.
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