New Fund In Britain Could Signal Investment Away From India

Overwhelming initial response to the fund launched by NRI on LSE

The launch of an investment fund by a non-resident Indian (NRI) on the London Stock Exchange could signal a turning away of portfolio investment from India, financial managers here say.

Jayesh Manek, who won The Sunday Times fantasy fund twice and then decided to do it for real, launched a new investment fund here yesterday.

The Manek Growth Fund will invest primarily in UK quoted companies, the managers of the fund announced.

The decision to invest primarily in the London market is particularly significant because after Manek won The Sunday Times competition in 1994 and then 1995, he had proudly launched his first investment fund that was for real in Mumbai. That fund has not done remotely as well as expected.

 

Any NRI venture in India is closely watched by British managers and by the government.

A senior British trade official said recently that we expect that people of Indian origin know India better than anyone else.

A significant investment by NRIs in India would be an invitation to the rest; a turning away from there could be seen as a warning.

Some investment managers see a double signal here: one, the first NRI investment fund in India has shown a performance far from spectacular; and two, Asians in Britain too are turning away from investing in Asian markets rocked by uncertainties.

The fund has been launched by Manek Investment Management Limited, the fund management company set up by Manek earlier this month. Manek received 3,000 inquiries the first day he launched the company.

A large number of these were reportedly from NRIs.

Manek had aimed at a fund in London even while he launched the Indian investment project. But the market uncertainties of Asia and the political uncertainties within India have played havoc with the Mumbai market and NRI investors are demanding safer investments in the West than in India, a manager with an American fund said.

The Manek Growth Fund, though founded by an NRI, is not just for NRIs.

Its first significant capital, a sum of 13 million, which Manek has been handling and multiplying, is from the investor Sir John Templeton.

But a large number of middle class NRIs who do not have money to invest in the large funds are expected to make large investments in this fund.

The fund has set the minimum initial investment at only1,000, with a minimum subsequent investment of 500. It has a regular savings plan with a minimum of no more than 50 a month.

The overwhelming response to the fund has come from middle class investors who want to move their savings from banks to more profitable investments.

The initial offer runs from November 26 to December 16. The initial response shows that interest in the fund could well be more than it is set to handle.

Indian trade officials are, however, looking at the flip side of the likely success of this fund. It means for one thing that the new investors are going to ask for investment in this new fund and not in the earlier investment venture by Manek in India, one official said.

NRI investment in the Mumbai market has been slowing down of late. The launch of the new fund by Manek puts an Indian face to investments in British companies through the London Stock Exchange. To many investors this face is at the moment looking far friendlier than that of the Mumbai Stock Exchange.