MENAFN - Khaleej Times
UTI turns to Gulf potential
(MENAFN - Khaleej Times) UTI International - a subsidiary of India's oldest and one of the largest asset management companies, UTI AMC India - will continue to attract more institutional clients from the Gulf region for investments in one of the fastest-growing economies of the world, its top official said.
The company, which serves the region through its representative office in Dubai, is all set to launch another fund in Dublin by early March. The UCITS-compliant Indian equities fund will offer investment opportunities to international and regional investors seeking good returns on their investment.
"Our mission is to help regional investors understand the dynamics of investing in Indian equities, debt and private equity. We find that GCC clients like the conservative investment approach of UTI," Praveen Jagwani, chief executive officer of UTI International, told Khaleej Times in an interview during his recent visit to Dubai.
UTI International has approximately 2.4 billion of assets under management, or AUM. It has a representative office in Dubai since 1998 and is being governed by the UAE Central Bank.
UTI, a 100-per cent subsidiary of UTI AMC India, was created in 1964. It continues to be seen as a quasi-sovereign institution, with 74 per cent of its equity held by state-owned financial institutions.
Jagwani, a banking veteran with a 22-year track record in the financial services industry, explained UTI's background and discussed various investment options available in the Indian market through UTI.
"UTI started its rep office operation in Dubai 15 years back with the approval of UAE Central Bank, and since then has been promoting India-centric investments in the region. Although, it initially catered to just the NRI [non-resident Indian] community, now many local banks and institutions use us for their investments in India," he said.
He said the UAE offers an ideal base for managing the company's regional client relationships and there are no immediate plans to expand operations in the region.
"The GCC in general and UAE in particular have a robust financial ecosystem. It has created an environment for wealth creation and professional investment management," he said.
In reply to a question about potential Gulf investors, he said: "Our business model is to primarily advise institutional clients. For the retail and NRI segment, we rely on our partnerships with local banks and distributors."
He said Gulf institutional investors are eager to invest in various sectors of the Indian economy and UTI International help them access Indian investments in a manner that is most suitable.
Without elaborating the names of institutions and investors, he said the UTI offers a right investment platform to its clients from the UAE, Kuwait, Qatar and Oman, among others, in the region to invest in key sectors of Indian economy.
"The GCC and India share a close historical affinity. The resurgent India bonds and India Millennium Deposits have been trend setting products in the region. Thus, the NRIs in the Gulf countries continue to be one of the biggest investor groups for India."
"With online brokerages and proliferation of Indian banks, we find that the NRI community is adequately serviced. Thus, our focus has shifted to the institutional space, where we are finding a lot of success," he said.
Jagwani said the funds offered by UTI are open to all nationalities except where restricted by the regulatory regime.
"We are pleased to share that the primary investors in our recently launched UTI Indian fixed-income fund have been GCC institutions," he said, and adding that 40 per cent of UTI International clients are from the GCC region.
To a question about UTI products and return on investments, he said UTI manages the oldest diversified offshore India equity fund in the world. It was launched in 1986 to capture the growth of the Indian economy.
"For more than 26 years, the fund has consistently outperformed the benchmark. In 2012, the fund delivered a return of 30.84 per cent compared to the benchmark return of 26.37 per cent. In the five-year, seven-year and 10-year performance categories, it has consistently been a top quartile fund."
About the company's performance last year, he said 2012 was a good year for UTI International.
"During the year, UTI was able to add new clients globally including Europe, Asia and the Middle East. Assets nearly doubled and now stand at 2.4 billion. Major growth was in the fixed income space as global investors chased yield."
It is pertinent to note that UTI Group manages approximately 29 billion through its various arms. UTI AMC has assets under management of approximately 13.05 billion with more than 10 million investors and 76 products. In addition, it provides support services to Indian government for managing assets over 10 billion. Besides this, it also manages national pension of 3 billion and its private equity arm manages 500 million.
Indian outlook bullish
Jagwani is upbeat about the Indian economy and said the country will stay on growth path in years to come. He poses big confidence in Indian Finance Minister P. Chidambaram and appreciated his recent initiatives to steer the economy out of the doldrums.
"Although the past few years have seen patchy growth in India, the government sent a powerful signal last year by installing Chidambaram as the finance minister. He is a seasoned and progressive reformist. He has unleashed a series of changes that will lead to greater integration of the country with global economy," he said.
"By opening up aviation, retail and media sectors, the finance minister has incentivised foreign direct investment. He has embarked on a plan for divestments and expenditure control to tackle the fiscal deficit. He is aiming to contain the deficit in the region of 5.3 per cent with a goal of bringing it below three per cent by 2016. The recent divestment in NTPC was extremely well received by the markets," he added.
"In 2013, we expect the fortunes of India to improve. As inflation moderates and the interest rate cuts take hold, the growth pattern will resume. Improving domestic fundamentals together with global liquidity is likely to result in a risk-on trade for emerging markets in general and India in particular," Jagwani explained.
In reply to a question about investment opportunities, he said as global growth stabilises, emerging equities are likely to benefit this year. Also, the hunt for yield has intensified and global investors will continue to look for high-yielding opportunities in emerging markets.
"To capture this surge, the UTI has recently launched UCITS-complaint Indian fixed-income fund in Dublin. Global investors find it difficult to access Indian debt markets due to cumbersome regulations. Our fund offers a great solution to such investors, who seek well managed access with daily liquidity."
He said the fund primarily invests in Indian government securities and high-grade corporate debt and has attracted interest from various institutions and private banks in Europe, the Middle East and South Asia.
"We are also launching a UCITS-compliant Indian equities fund by early next month on a managed account platform called Milltrust in Dublin," he concluded.
By Muzaffar Rizvi
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