After a six-month-long acquisition and regulatory process, it's finally official — the First India Mutual Fund is now Sahara Mutual Fund. This marks Sahara's — one of India's largest non-banking finance companies (NBFCs) — entry into the mutual fund business. The new AMC will be called the Sahara Asset Management Company (P) Ltd. Earlier, First India was sponsored by A.C. Muthiah, who runs the SPIC group. Muthiah was personally the AMC's sponsor — technically, it had nothing to do with SPIC. The foreign partner in the AMC is Investec, which is a subsidiary of the US-based insurance company MetLife.
With the acquisition, the names of all existing First India schemes have undergone a change. Instead of First India, the pre-fix changes to Sahara. However, all scheme features, objectives as well as fund management are intact for the time being. Of course, the Sahara group has its own distinct way of running its businesses and changes can hardly be ruled out in the long-term.
With the might of Sahara group behind it, Sahara Mutual appears poised for a big marketing push. While the SPIC group is largely south-based, Sahara has great strengths in the north.
Says CEO R. Balakrishnan, "We are planning to push our products largely as a retail vehicle. In the next 12 months down the line, we expect to reach out to 25 cities." First India currently had offices in Bangalore, Chennai, Delhi, Kolkata and Mumbai.
First India mutual fund was set up in 1996 but was practically dormant till 2002. During this time, it just had one product — a closed-end tax-planning fund (which is now open-end). In 2002, the AMC activated itself and launched five new schemes. Currently, Sahara Mutual Fund has six funds in its kitty — two equity funds, two debt funds and two short-term funds with total assets under management of Rs 349.14 crore as on March 31, 2004.
At this point, it is 1.7 per cent of the size of the largest AMC. Its market share is a tiny 0.25 per cent of the Indian mutual fund industry. The new ownership is bound to mark a big leap forward for this AMC, but it will take a great deal of hard work for Sahara Mutual to become a major player.