HDFC Asset Management targets deemed FII status

Mukta Malhotra

Mumbai, May 7: HDFC Asset Management plans to become an deemed FII. The board of directors at its recent meeting has given an approval to the AMC’s decision to become an FII. However, this would be subject to the Sebi approval.

The AMC would soon approach the Securities and Exchange Board of India (Sebi) for getting a deemed Foreign Institutional Investors (FII) status. The AMC already has the portfolio management services licence from the Sebi and has been advicing HDFC-Standard Life Insurance on investment of its capital.

Confirming the move to The Financial Express, HDFC Asset Management Company managing director Milind Barve said: “Standard Life Investments wants us to manage their funds of $33 million and has also given us the permission. Therefore, we would be moving towrads providing discretionary management services to Standard Life Investments, which is registered as an FII, from the current advisory services we are giving Standard Life Investments. But to be able to manage funds raised by an FII, the Sebi regulations require that the domestic asset management company should be registered as an FII. We would be soon submitting an application to the Sebi to this effect.”

After UTI IAS and Reliance Asset Management, HDFC AMC would be the third in the mutual fund industry to apply for the deemed FII status.

According to market circles, Sebi is believed to be re-thinking its decision of registering some of the portfolio managers and domestic asset management companies as deemed FIIs. However, when contacted by The Financial Express UTI executive director SK Basu said: “We have not received any official intimation from the Sebi telling us to shelve our deemed FII plans for UTI IAS.”

According to sources, Sebi is basically averse to those brokers, who are portfolio managers and who have applied for the deemed FII status, and not to the domestic asset management companies.

Standard Life Investments is an arm of Standard Life Assurance Company (SLAC) of the UK and has a 26 per cent stake in HDFC AMC. Recently, SLAC had acquired a 26 per cent stake in HDFC Asset Management. The 52 lakh shares it acquired, at Rs 107.7 per share, was one the largest deals of recent times.

The MF is already retailed as HDFC MF in association with Standard Life Investment, which is an arm of SLAC-UK. According to the joint participation agreement entered into between HDFC and Standard Life Investments Ltd, HDFC had agreed to sell to Standard Life Investments Ltd or to any of its associates, 26 per cent of the paid up share capital.

The mutual fund, which was launched in August 2000, has a net asset of Rs 1,667 crore as on May 4, 2001. The AMC has six schemes under its product portfolio.