Lotus sees huge redemptions

Investors pulling out after equity head Sandip Sabharwal's exit.

Trouble seems to be brewing at Lotus Asset Management following the controversial exit of its equity head Sandip Sabharwal. The $100 million off-shore fund managed by Fullerton for which Lotus was the investment advisor has seen significant redemptions over the past few weeks.

Though the exact numbers could not be confirmed, all investors except Temasek are understood to have redeemed their investments following the exit of the key investment advisor. Fullerton, an affiliate of Temasek, is one of the sponsors of Lotus Mutual.

Lotus CEO Ajay Bagga refused to comment on the issue and an e-mail sent to Fullerton failed to elicit any response.

Meanwhile, Lotus,which had announced plans to launch its products after it got an approval from the capital market regulator some time ago is scouting desperately for a replacement for its equity head.

Bagga said the "search is on" while sources said three investment professionals contacted by the firm so far had declined the offer.

While there is an acute shortage of fund managers due to the growing number of fund schemes and new players, compounded by fund managers looking outside the industry for better deals, Lotus is in a spot despite its pedigree.

Fund managers fear lack of adequate organisation support at a time when regulators are becoming more stringent and aggressive in levelling charges.

Earlier, Lotus Asset Management's joint sponsor Sabre Capital had severed ties with the star fund manager Samir Arora after he faced charges of insider trading, even though he was vindicated by the Securities Appellate Tribunal.

The unceremonious exit of Sabharwal even before the judicial proceedings started is making potential candidates look at the offer with scepticism, despite the brand equity of Temasek.

Sabharwal had quit the firm earlier this month, citing personal reasons, but rumours had it that he was asked to resign after his name figured in the CBI probes into the Ketan Parekh scam.

The other two fund managers "" Principal Chief Investment Officer Rajat Jain and equity fund manager at Standard Chartered Mutual, Ajay Bodke "" who faced similar charges, continue in their jobs.