UBI,Indiabulls to enter MF space

After waiting for over a year,Union Bank of India has got the approval from Sebi to enter the MF arena.

After waiting for over a year,the state-run Union Bank of India has finally got the approval from the markets watchdog Sebi to enter the mutual fund (MF) arena.

Meanwhile,Indiabulls Financial Services,too,said it got the regulatory nod for launching its mutual fund company.

“We have received the licence from Sebi today. We hope to launch the business within the next two months,” Union Bank Chairman and Managing Director M V Nair said.

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On the kind/number of products that the company would come out with,Nair said,”we will launching two products for sure. The details are yet to be worked.”

“Indiabulls Mutual Fund,sponsored by Indiabulls Financial Services,has got the final approval from Sebi to launch its mutual fund business. It plans to hit the market with its maiden offering in both equity and fixed income segment in a couple of months,” it said in a release here.

Way back in November 2008,the city-headquartered Union Bank had tied up with the Belgian financial powerhouse KBC Asset Management to enter the MF business.

At a time the domestic MF market was down in the dumps following the global financial meltdown that began in September 2008 with the fall of Lehman Brothers and many other Wall Street titans.

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After getting shareholders’ approval,the bank moved the Sebi for approval in early 2009. Announcing the tie-up,the public lender had then indicated that it was looking forward to launch the business by January 2011.

Union Bank holds 51 per cent stake in the JV,which has a capital base of Rs 50 crore,while the balance is with the Belgian firm. The KBC Group is one of the largest MF players in Belgium and had assets under management worth euro 174 billion as of end 2007.

“Indiabulls Financial Service is at an advanced stage of operational preparedness with almost the entire research and operations team in place,and is currently working on the initial product profile,” the company said. Indiabulls had applied for the Sebi licence in 2007.

Indiabulls Financial is a leading NBFC with an asset book of close to Rs 20,000 crore and a net worth of Rs 4,500 crore,and has a strong presence in its lending business.

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On Thursday,India Infoline,too,had said that it had received Sebi go-ahead for its MF venture. It had applied for a mutual fund licence in 2008. “We have received an approval from Sebi to start the mutual fund business,” said India Infoline Chairman Nirmal Jain in a release on Thursday.

Sebi is yet to approve 23 more MF applications.

According to people familiar with the matter,Sebi is not comfortable in granting MF licences to financial services firms and also to non-serious players.

After a scorching 50 per cent growth till about early 2008,the Rs 6.2-trillion domestic MF industry has been managing to clock around 9 per cent growth. The new three licences take the overall number of MF players to 43 now.

The new applicants are hopeful that even then penetration is very meagre and MF assets constitute only under 10 per cent of the GDP.