Union Bank goes into mutual fund business

The lender joined forces with Belgium’s KBC Asset Management to form Union KBC Asset Management Company amidst crowded mutual fund market.

Union Bank of India on Wednesday announced its foray into the crowded mutual fund space joining hands with KBC Asset Management of Belgium to launch Union KBC Asset Management Company.

The joint venture will see Union Bank of India hold 51 per cent stake and KBC Asset Management own 49 per cent stake in the joint venture firm. Union KBC AMC will float its first open-ended equity scheme called Union KBC Equity Fund, which would be open from May 20 to June 3.

“We would want to be amongst top 10 mutual fund houses in the country in the next five years,” said MV Nair, chairman and managing director, Union Bank of India. A total of 43 mutual fund houses are operating in the country with total assets under management in the end March standing at slightly over Rs 7,00,000 crore, as per details available on the Amfi website.

The mutual fund will look to raise Rs 600 crore by the end of 2011 for its equity fund schemes. Depending on the market condition, the fund house may also look to launch equity linked savings scheme (ELSS) and a mid-cap fund, but floating an offshore fund in the near-term is not in the radar, said Ashish Ranawade, chief investment officer at Union KBC Mutual Fund.

The first scheme, Union KBC Equity Fund, will primarily invest in a portfolio consisting of equity and equity related securities, the company said in a media release. “We will invest 80 per cent of the corpus in large-cap stocks consisting of BSE-100 companies in order to bring stability to the product,” said Ranawade.

View the full story in Financial Chronicle.