Housing Development Finance Company (HDFC) is all set to acquire the assets of Alliance Capital Mutual Fund, even as Samir Arora, its chief investment officer, is desperately pitching for funds from corporate houses to buy the assets.
In a last-ditch attempt, Arora will hold discussions with his financial backers, Henderson Associates, on Monday. The meeting will focus on his strategy for mobilising funds in his bid for Alliance, a mutual fund that trades on his name and has virtually been built up by him.
According to sources familiar with the deal, Arora has approached practically all top corporate houses this week, including the Tatas, the AV Birla group, the Godrej group and even the Bajaj group.
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HDFC, which is learnt to have put in a comparably high bid of close to 6 per cent of the assets of Alliance, is quietly waiting for the hectic consultations to subside and for the final round of negotiations to begin.
The deal is expected to be concluded in the first week of February. Alliance has been facing a run on its assets as investors have been pulling out of the fund apprehending that Samir Arora would not be there to manage their investments.
The fund was selling Polaris, Digital, SSI, ITC, Reliance and a few other stocks to meet its redemption obligations, sources said.
Today Alliance sold some of the tech stocks from its kitty, including Digital and Satyam. In fact, this is one of the reasons for the fall of the Sensex.
While clear figures were not available, Rs 150-200 crore have flowed out of the fund over the last few days. Last month the fund saw its assets eroding by more than Rs 500 crore to around Rs 3,300 crore. This is on account of the normal year-end obligations.
The erosion in assets will help both the contenders as their final payout will be less than what they had initially bid since the pricing is always a percentage of the total assets under management. It will particularly help Arora, who faces constraints in raising funds.