Adb May Pick Up 25 Per Cent In Sbi Mutual Fund

Asian Development Bank (ADB) is likely to pick up a 25 per cent stake in SBI Mutual Fund. It already has stakes in SBI Capital Markets, SBI Securities and SBI Gilts.Senior SBI Mutual officials told Business Standard yesterday that talks were on and it was likely that ADB would pick up a 25 per cent stake in the fund.

An official said ADB was particularly interested in the core sector and would invest over $100 million in the development of infrastructure in Gujarat alone.

Apart from ADB, five other foreign institutions have shown interest in forming a joint venture in the asset management business. Among them are US-based American Insurance Group and a Citibank subsidiary in Australia.

Talks with AIG fell through as it wanted a 50 per cent stake in the asset management business. This could not be allowed as it would have given the US major an easy access to SBI Mutuals brand equity built over the years, sources said. However, talks are on with AIG to set up a separate subsidiary in which it would have a 50 per cent stake. This could also mark SBIs foray in the insurance sector. Talks are also on with a South Africa-based financial institution for launching the first-ever off-shore fund that would collect subscriptions from South Africa and invest in India.

SBI Mutual Fund manages over Rs 2,300 crore of more than 30 lakh investors. It has 21 domestic and two off-shore schemes in its fold. It will launch a monthly income scheme -- the Magnum Monthly Income Scheme, 1997-- on April 17. The scheme assures an annual return of 15 per cent in the first year.The scheme has a six-year tenure, which can be extended by another year. While at least 80 per cent of the schemes corpus will be invested in low-risk debt instruments, the rest will be invested in equity and money market instruments.