ITC Ltd is keen on tying up directly with Threadneedle, an associate of British tobacco giant BAT Plc, for staying on in the joint venture mutual fund ITC Threadneedle AMC Ltd.
The mutual fund is a joint venture between Threadneedle and ITC Classic, the financial services arm of ITC Ltd.
ITC wants to go for a direct tie-up with Threadneedle after selling its stake in Classic. The Indian cigarette major is planning to sell its 49 per cent holding in ITC Classic to get out of the leasing and hire-purchase business, the financial services companys predominant areas of business.
ITCs plans for a direct joint venture with the BAT associate would entail the company buying the 50 per cent stake ITC Classic holds in the joint venture mutual fund. We may pick up the stake held by Classic, but only in the mutual fund business. ITC can then work with BAT directly, an ITC official told Business Standard. ITC has decided to snap its ties with the other subsidiaries of ITC Classic. Besides the mutual fund, ITC Classic has three more fully-owned subsidiaries: Classic Credit, Classic Share & Stock Broking Services and ITC Classic Home Finance Ltd.
ITC has decided against continuing in the financial services business as it no longer fits into the companys scheme of things.
Besides, ITC Classic has taken a major beating on its fixed deposits following the controversy over the allegations of Foreign Exchange Regulation Act (Fera) violations by ITC Ltd.
Corporate circles expressed surprised over BATs refusal to pick up ITC Ltds stake in Classic on the grounds that the finance companys business did not mesh with the British companys core competence.
ITC is now negotiating with four prospective buyers for selling the stake. ITC Classic Threadneedles maiden fund, Top 200, has been doing fairly well in a depressed market and has just been judged the best performing growth fund by an international fund tracking company.
