The Aberdeen, Scotland-based fund manager, Abtrust, is in talks with Peerless Financial Services to set up an asset management company.
Abtrust and the Peerless group had parleys late last month in Calcutta, said sources.
"However, a decision on the issue of floating an asset management company is yet to be taken as the idea is still at the drawing board level," sources said.
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Abtrust has evinced interest in the Indian non-banking financial company to cash in on the Peerless group's nation-wide network.
If the talks materialise, this would be Peerless' first venture into management of mutual fund through a separate subsidiary.
Moreover, the company will be able to use the common pool of agents of Peerless General Finance & Investment Company (PGFIL) and Peerless Financial Services (PFS).
PGFIL has a distribution strength of almost 4 lakh agents spread across 139 centres in India. PFS is at an advantage as far as the distribution costs are concerned since these are lower by two-to-five per cent compared with the flagship company, said a source.
With the provision of a single window for accessing a wide range of financial products, the agents of the company are in a position to offer a broader choice to traditional depositors
Agents normally are able to mop up significantly larger volumes of deposits by offering wide choice to depositors. PFS, which is primarily engaged in debt placement, syndication, leasing and hire purchase, bill discounting and inter-corporate loans, has recently been accredited as a Category I merchant banker.
The company is believed to be the sole arranger for bonds of Mafatlal and Srei. Apart from public sector bonds, PFS handled corporate bonds, including those of Ceat, Supreme Industries and Duncan Industries. The total business handled during the year 1995-96 was over Rs 35 crore.
The company as a part of its strategy is expected to expand its operations into the southern regions accessing PGFIL's traditional bases. At present the PFS' operations cater mostly to the eastern and western markets.
Retail networking has remained a major area of operation for the non-banking financial company. However, the company, during 1995-96, concentrated on settling grievances of marketing agents and recovery of dues from past assignments.
New teams have been put into high potential areas like Gujarat, Maharashtra and Andhra Pradesh. PFS, an associate of the Peerless group, was freed of its subsidiary status in 1995 when the flagship PGFIL sold 70 per cent of its holding in PFS. Currently, PGFIL holds 29 per cent stake in the company.