UTI Mutual Fund has successfully raised about $1 billion, nearly 4,800 crore, through its India dedicated debt fund from investors abroad despite the global economic turmoil and extreme risk aversion, Economic Times reported.
The funds were mobilized through UTI International, the wholly-owned subsidiary of UTI Mutual Fund, India’s oldest and fourth-largest asset management company. This is the largest fund mobilization by an Indian mutual fund in the overseas market.
UTI International that India Debt Opportunities Fund since 2004 has an average corpus size of only $100 million. It also has a $1 billion equity fund.
“We have mobilized around $1 billion within the stipulated period,” Pravin Jagwani CEO, UTI International. He also stated, the overwhelming responses reflect the strength of our fund house and appetite for the Indian papers among the overseas investors.
The successful fund raising comes in the background of the ongoing wrangling between the shareholders of UTI Mutual Fund over who should head the fund. The position of chairman and managing director of UTI Mutual Fund fell vacant in February when UK Sinha left to head Securities & Exchange Board of India.
Dhirendra Kumar, head of Value Research, an independent outfit that tracks the Indian mutual fund industry, said, “This is a significant milestone for UTI and infact for the Indian mutual fund industry.” Raising this kind of money in one tranche even from the domestic market is almost impossible, he opined.
The erstwhile UTI had raised 4,800 crore from the domestic market under its famous Mastergain in 1992. JP Morgan raised $300 million from overseas market in 2004 and recently Tata Mutual Fund has raised $500 million from overseas. The proceeds into the fund have already been invested in the debt market.
"In a challenging environment, raising $1 billion is significant development," Vijayan Krishnamurthy, former CEO of JP Morgan and IDBI Mutual fund said.
The US-based T Rowe Price, which is the single-largest shareholder with 26% stake in UTI Mutual Fund, has played an important role in the fund raising. "UTI is an established brand and T Rowe Price has certainly helped in strengthening the brand and has extended the macro-level support for fund raising," said another official.
UTI Mutual Fund has investment policy of delivering stable returns in the medium to long-term with a fairly lower volatility of fund returns compared to the broad market.
The company gives equal importance to asset allocation and sectoral allocation as it gives to security selection while managing any fund.
