Date:15/12/2007 URL: http://www.thehindubusinessline.com/2007/12/15/stories/2007121551561500.htm

Back Mutual Fund sponsor cos sizzle

UTI Mutual Fund's IPO plans (it recently filed its prospectus for the initial public offering with the SEBI) have galvanised the stocks of companies that have stake in asset management companies. Holding companies such as Escorts Finance and Aditya Birla Nuvo have been witnessing strong buying interest in the bourses.

According to market men, the IPO of UTI Mutual Fund could give fresh cues on valuation of the asset management business. This could potentially unlock value for holding companies of such mutual funds.

Escorts Finance holds about 49 per cent stake in Escorts Mutual Fund while Aditya Birla Nuvo has 50 per cent stake in Birla Sun Life. Besides, the recent deal between Reliance Mutual Fund and Eton Park, which bought 5 per cent stake in the former for Rs 501 crore, also bodes well for the industry, say analysts tracking the mutual fund industry. The valuation for this deal was among the highest within the mutual fund industry in recent times.

While Escorts Finance jumped 4.96 per cent on Friday to end at Rs 17.78 on the BSE, Aditya Birla Nuvo gained 1.83 per cent. For the week, they gained 27 per cent and 7.85 per cent respectively while the month's scorecard stood at 133 per cent and 18.56 per cent.

For the other listed companies that hold stakes in respective AMCs, analysts said, their AMC business contribution is small in relation to their core business.

K.S. Badri Narayanan