Sun F&C Asset Management (India), the venture between Foreign & Colonial Emerging Markets and Sun Securities, is set to strengthen its total business program me in the country. This follows a stated policy from Hypo F&C, one of the promoters of F&C Emerging Markets, that the group should identify itself as a global player and be able to offer international fund management services to markets in other countries.
James Ogilvy, chairman, Hypo F&C Management Ltd is currently touring the country and is in talks with other domestic mutual fund players and corporates to explore new strategies and possible partnerships. India is the only market where F&C actually has an overseas office.
The group, being one of the leading asset management units in the UK managing assets of over $ 46 billion and tracking markets across 39 countries, has witnessed a major deal being struck last week. The Hypo group and Veri-nse Bank, two leading German banks have decided to merge. While it is a done-deal, the single bank entity will not come about until mid-summer 1998. Investment house J P Morgan advised the deal, sources said. We, as a global investment bank, now believe that we are of a size which is sufficiently large to access money from other parts of the world. We have to move forward, Ogilvy said. The operation starts with India as the first protocol, he said.
Commenting on the Indian markets, Ogilvy said India remains a relatively positive market.
There is the commitment to deregulate the markets further but one is not sure of the speed at which it will take place, he said . According to a study carried out by F&C on risk/reward tradeoffs for a 10-year period, an investor who has placed all his money in the domestic markets takes a low risk (15 %), while returns are placed at 15.5%. If all the money is invested overseas, the risk percentage is higher at 19 per cent and returns at 17%. The optimum level advocated is a 70 % exposure in the Indian markets and a 30 % investment overseas.
Sun F&C, which has invested $ 350 million in the Indian markets, has been an active player in volatile conditions, buying at lower levels in recent times. The Sun F&Cs India Performance Fund has outperformed the BSE dollex index by 18 per cent and the India Value Fund has outperformed the BSE sensex by 10 per cent since its launch. Ogilvy said that a further consolidation within the investment banking sector will take place.
The F&C study shows the global investment management growth in number of fund managers, increasing from 36 in 1981 to over 500 in 1995.
What will change, however, is that the main global players will come down sharply to just 25 by the turn of the century and the remainder would be small-sized investment banking houses. It is not that the pie is getting smaller but that the mouth is getting wider, he said.
