News: Kotak Mahindra goes for the global investor

(DNA 02/05/2007) Kotak Mahindra, which derives 70% of its international revenues from asset management, is spreading its wings to get a better grip over the global investor.

The firm, which has had an overseas presence for over 12 years now, closed its India Equities Fund, meant for Australian investors, on March 28, 2007, collecting Aus$75 million. The closed-ended fund listed on the Australian Stock Exchange on April 5, 2007 and its units have since been trading at premium to the issue price of Aus$1.

"If the response is good and it continues to trade at premium for an extended period of time, we are not averse to issuing fresh units," said Paul Parambi, head of international business at Kotak Mahindra Bank.

The fund becomes the first offering that will help the Australian retail investor partake of the India growth story. Most other India-dedicated funds, like those managed by HSBC, JP Morgan, Fidelity, Nomura and Morgan Stanley, are multi-billion dollar global funds that target institutional investors and high networth individuals.

Even domestic asset managers like UTI Mutual Fund manage offshore funds, though their focus is not on retail investors.

"This fund (Kotak Mahindra's) has a retail focus, with a majority of the 3,000 investors who bought units, belonging to the retail segment," said Parambi. The minimum application size was Aus$2,000.

Kotak is not new to managing money from abroad. It manages around $260 million of offshore funds, though these focus on the institutional investors.

Outlining Kotak's plans to be among the dominant global asset managers investing into India, Parambi said: "We want to grow our international asset management business ten-fold in the next four years. While we have started off with Australia, we are looking at other such retail products in the US, European and Japanese markets."

Kotak's approach is to either launch its own offshore fund regulated in the respective jurisdiction or partner with local players who have the ability to reach out to local investors.

For the Australian fund, Kotak has tied up with Australia's Olympus Fund Management. It will be managed by Kotak Mahindra (UK)'s Dubai-based fund managers.

The India Equities Fund is benchmarked against the BSE 200 index, and has a mandate to invest primarily in large-caps, with a 30% limit set for exposure to mid-caps.