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UTI Mutual closes in on Alliance Cap

Mumbai, Feb. 12: UTI Mutual Fund has zeroed in on Alliance Capital Mutual Fund as its next possible buyout. It snapped up IL&FS Mutual Fund last week.

If a deal is clinched, UTI Mutual, which manages Rs 19,661.41 crore in investors’ wealth, will get a shot in the arm from Alliance’s corpus of Rs 2,305.77 crore. IL&FS Mutual’s Rs 2,574.46 crore is already in its bag.

Whiff of the new acquisition plan came on Wednesday from Delhi, where the top-brass of UTI Mutual reportedly sounded the finance ministry on the bid.

“We missed out on Zurich Mutual Fund because we were caught up in other matters. Now that we have sorted them, we can expand our business,” a senior UTI official said.

Funds are not a problem for UTI Mutual, which can make Rs 200 crore merely by charging a 1 per cent fee on its Rs 20,000-crore corpus, as it goes on the prowl for Alliance.

With private sector mutual funds sniping at its heels, UTI Mutual Fund feels it must do everything to retain its lead in an industry swept up in a wave of consolidation.

Prudental ICICI Mutual Fund, with assets under management of Rs 16,000 crore, Templeton Mutual Fund with Rs 15,994 crore and HDFC Mutual Fund with Rs 15,319 crore are not far behind in the race for dominance.

Already, several close-ended assured-return schemes managed by the other part of UTI — UTI-I —are drawing to a close. Seven plans are being foreclosed by offering unit-holders the option to invest in 6.6 per cent tax-free five-year bonds.

With the corpus shrinking as old schemes are wound up, UTI has made no bones about growing both organically and inorganically to retain its leadership.

Alliance gains

Alliance Mutual Fund, which has seen turbulent times since the exit of its one-time high-profile chief Samir Arora, still remains a coveted mutual fund to have. The entry of Rajnish Narula as the new CEO has halted the scramble of investors out of Alliance, which is still treated with a lot of respect in the industry because of its adept fund managers and strong brand equity.

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