UTI, Europe bank to float core fund

UTI Asset Management Company is close to forging a tie-up with a European bank for launching an offshore fund dedicated to investments in the domestic infrastructure stocks. The corpus of the fund will be about $300 million.

This will be UTI AMC's second infrastructure fund and comes after the close of its first infrastructure fund it launched in tie-up with Australia's AMP in 1999. The fund had given a compounded annual growth rate (CAGR) of 35 per cent in dollar terms.

"We are negotiating with a top European financial services firm for this fund, which would be aimed at investing in infrastructure. Once through, this would be the foreign firm's first India-centric investment," UTI MF Chairman and Managing Director U K Sinha said.

With rising equity returns from the domestic investments, the domestic AMCs were looking forward to launching more offshore funds, said analysts. UTI AMC had raised $108 million from Japanese investors recently through a tie-up with Shinsei Bank. "We have started investing that money in India," Sinha said.

UTI AMC, through its subsidiary UTI International has five offshore funds, which also include India fund, India IT fund and India Pharma fund.

The company recently lost its number-one position in the mutual fund business to Reliance Mutual Fund.