Hudco braces to unwrap mutual fund

Housing and Urban Development Corporation Ltd (Hudco) has decided to diversify into financial services areas and has firmed up plans of launching a mutual fund (MF). It was likely to tie-up with a MF player in the next two months and talks were at an advanced stage.

"We have entered into talks with around a few parties and a tie-up is expected in the next two months. Hudco is also exploring the possibility the possibility of launching a fund in collaboration of a foreign established mutual fund player," explained P S Rana, chairman , Hudco.

Rana however declined to name the parties Hudco had entered into talk with. In a parallel development the housing development company has targeted a total sanction figure of Rs 12,000 crore in 2005-06 against an expected achievement figure of Rs 11,000 crore for 2004-05.

Disbursement on the other hand was expected to be around Rs 6,500 crore in 2005-06.

"We would be raising around Rs 6,500 crore from the market through bonds, bank loans, financial institutions, provident funds as well as external commercial borrowings. The quantum of fund to be raised through be ECB would be to the tune of $300 million and we have already applied to Reserve Bank of India for permission," explained Rana.

"We would weight the rate of interest being offered by foreign institutions against the rates we get in the domestic market - a decision would depend on the most competitive rates," he added.

Meanwhile, Hudco has identified a number of thrust area for further supplementing its profitability, diversifying its operations and operation base through fee based activities.

The potential avenues identified were consultancy in financial and project management, corporate planning and restructuring of local bodies, housing and public utility institutions, consultancy management to the state governments, securitisation, property valuation, project formulation and techno-economic feasibility.

It has also identified areas like take-out financing, real estate development, and promotion of joint ventures in strategic areas for mutual advantage.

Hudco's vision for 2012 was to emerge as the market leader by consolidating and elevating Hudco's image in areas like housing and urban infrastructure finance through market orientation involving public-private and peoples participation and wider coverage of market both through reaching out to new segments and diversifying into related areas to provide new services, while keeping its social commitment and promoting appropriate building technologies by competent motivated work force.