Dawnay Day scouts for joint venture partner to shore up mutual fund business

Dawnay Day AV, the financial services company managed by Alok Vajpeyi, former president of DSP-Merrill Lynch's Investment Managers, will soon announce its joint venture partner for its foray into the mutual fund business.

The group is also looking to acquire a broking firm to scale up its stock broking business. "We are in the final stages of zeroing upon a JV partner and we should be able to announce it in 3-4 weeks. It may end up being a broking company," Alok Vajpeyi, vice-chairman and managing director of the group, said in an interview.

Though he did not divulge the names of the possible mutual fund partner, talks are on with various local outfits, and the majority will be held by the Dawnay Day group.

It has already put the team in place by roping in Sanjiv Roy from Birla Sun Life distribution company as the chief executive officer.

The company has appointed Vimal Bangar from the Zee group as the chief operating officer of the MF business. The other office holders will be appointed in consulatation with the JV partner, Vajpeyi said.

Dawnay Day had filed for a mutual fund licence with the market regulator, Securities and Exchange Board of India (Sebi), in 2006 and has already got an in-principle approval. After deciding upon the partner for MF business, it will file the final papers with Sebi.

The group expects to get final approval in 3-4 months and will be able to launch its first product by this year.

Vajpeyi also hinted at launching an offshore fund, which will use derivatives as a hedge. "It is in our thought process. Since raising money in these conditions is difficult, we look for the conditions to normalise but the main focus is on mutual fund for now," he said.

Dawnay Day is among many players that have evinced interest in coming up with an asset management company. Others in the fray include Bharti-Axa, Ambit-Nikko, Religare-Aegon, Goldman Sachs, Indiabulls and Edelweiss.

The Indian mutual fund industry is expected to grow at 33 per cent y-o-y from $92 billion in March 2007 to $350-440 billion by 2012, according to a study by global consultancy major McKinsey.

Over the last few years, the MF industry has grown at a scorching pace of 47 per cent per annum through product innovation, quicker turnaround time in servicing customers and emergence of banks and national distributors.