Uti Plans Schemes To Woo Distinct Fiis

The Unit Trust of India (UTI), which is launching its maiden India Debt Fund (IDF) to target foreign investors in the country's burgeoning debt market, has identified four distinct classes of international investors with an appetite for Indian debt. The trust also plans to unveil tailor-made schemes for each of them in the coming financial year.

India Debt Fund closes for subscriptions by June 24, and the funds are set to flow in by the first week of July.

UTI's chief general manager Basudeb Sen told Business Standard that the roadshows conducted by it over the past few weeks in connection with IDF had proved to be a massive success revealing a huge thirst for Indian debt.

 

This had prompted the company to undertake a clear strategy to woo the four classes of investors with specific funds. The four categories identified by UTI are: pension and provident funds interested in Indian debt foreign institutional investors which have a presence in the country but are not present in a big way in the market

nnon-resident Indians who are rich enough and want to invest in Indian debt paper other foreign investors who want a taste of the Indian debt market.

"All these classes of investors have their specific requirements, which UTI will address through specific schemes over the next year or so," Sen said.

India Debt Fund, UTI's fifth offshore fund after India Fund, India Growth Fund, Columbus Fund and India Access Fund, would target investors in the UK and the rest of Europe, the United States, Japan and south-east Asia. The minimum expectation from the fund is $30 million, but the trust expects the figure at around $100 million.

"We have realised during the roadshows that India is not at all properly publicised. There is a lot of interest from new investors wanting a taste of the country," Sen, who had participated in the roadshows, said.

The ten-year IDF initially would be close-ended for three years, with the fund turning open-ended from the third to the tenth year.

UTI so far has mopped up around Rs 1700 crore ($500 m) through its existing offshore funds, the latest of the lot being India Access Fund which has collected $54 million. India Fund was launched in 1986, followed by India Growth Fund for the US in 1988. UTI, he said, was telling the foreign investors that the debt market is less volatile than the equity markets, and was also set to grow rapidly.

The yields from corporate bonds are high, and the real rates of return too are relatively high in India. The rupee also has been stable against the dollar over the past four years, Sen pointed out, making foreign investors view on India more keenly.

"The way things are moving, full-convertibility may come about over the next two to three years if not earlier. All these are good signs for foreign investments in the debt market," he said.

The India Access Fund, launched earlier by UTI, was the first index fund launched by it overseas, linked to the NSE-50 (Nifty) index of the National Stock Exchange.

The fund has been tracking the Nifty, which UTI says is a very efficient index.