UTI Mutual to buy IL&FS schemes

UTI Mutual Fund (UTI MF), the biggest private sector mutual fund, yesterday signed a memorandum of understanding (MoU) to buy out the mutual fund schemes of IL&FS Mutual Fund.

The proposed acquisition will expand UTI MF's assets under management to over Rs 22,400 crore. Currently, IL&FS AMC manages 10 schemes with assets of around Rs 2,400 crore of which assets in equity schemes are at Rs 800 crore.

UTI MF currently manages 41 domestic schemes and four offshore schemes. IL&FS MF has an investor base of around 65,000 while UTI MF has over 10 million investors.

M Damodaran, UTI MF chairman, said, "Through this acquisition, UTI MF has further consolidated its leadership position in the Indian mutual fund industry. The entire acquisition process is expected to be completed in the next four months."

While the valuation has not yet been made public, sources said that it would be around 3 to 4 per cent of the acquired assets. UTI MF has made no commitments regarding retaining IL&FS MF's employees. N K Sharma, president and CEO of IL&FS MF, said, "a part of the talent pool will be retained".

At present the fund house has around 50 employees. Damodaran said, "nothing changes for the investors of IL&FS MF schemes. The investment style and the high level of service standards established by this team at IL&FS MF will continue."

In order to ensure that the transition process is smooth, a joint team of the two fund houses has been constituted.

While this is not the biggest acquisition, it is part of the consolidation taking place in the mutual fund sector. IL&FS Investsmart will also be distributing the products of UTIMF as a preferred fund house.

Booster shot

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• Acquisition to expand UTI Mutual's assets under management to over Rs 22,400 crore.
• UTI Mutual currently has 41 domestic schemes and four offshore schemes.
• IL&FS manages 10 plans with assets of around Rs 2,400 crore of which assets in equity schemes are at Rs 800 crore.