Ceat Fin Plans Mutual Foray, Scouts For Overseas Partner

Ceat Financial has decided to enter the mutual fund business, and is in process of finalising a foreign partner.

Ceat Financial will have a majority stake in the joint venture. "We are looking for people who will have full commitment in the joint venture. Therefore, apart from the technical collaboration, we would like to see our partner taking some financial stake in the venture," said B D Cardmaster, company secretary, Ceat Financial.

To begin with, the fund will be an income fund and subsequently, emphasis will be given to growth by converting the fund into a balanced fund.

Company sources are presently not sure about the outcome of the negotiation process. "It is a little premature to talk about the nature of the fund as it will be decided upon only when the deal is finally closed, and the terms of the foreign partner decided upon," Cardmaster said.

"Given the present perception on India, it will be premature to comment on who the partner will be unless things take a final shape. The entire plan may go down the drain if they suddenly decide that they are not going to look at India for the next two years," says a senior official at Ceat Financial.

In another development, the company is talking with IFC for another tranche of multilateral loans for its lease and hire purchase business in the infrastructure sector. The funds, according to sources, will be deployed in sectors like power, telecom and transport.

Earlier, in the last week of November, 1997, the company had raised $20 million from IFC.

Starting from January, 1998, the company has drawn almost half of the first tranche, and will completely draw down the funds by October this year, said sources.

Cardmaster says that the second tranche from IFC is expected to be at least equal to the earlier tranche. The company feels that the sanctions and downgrading will not adversely affect the terms of the loans.

"IFC has its own way of rating and it will follow the guidelines laid down by IBRD. So, the terms are not likely to be affected by the Moody's downgrade. As far as sanctions are concerned, loans sanctioned to some of the states indicate that they are not going to be so stringent," said Cardmaster.

The company is expecting a finer rate than the last tranche which it raised well within 200 bps over Libor.