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L&T Finance to enter mutual fund business

business Updated: Sep 09, 2009 20:55 IST
HT Correspondent

L&T Finance, the financial arm of engineering major Larsen & Toubro, said on Wednesday that the company might look at an asset management business, including mutual funds.

“We are looking at various options. If we need to get into that business, we may look at inorganic options as it would take a long time to set a business of this sort as a start-up,” N Sivaraman, Executive Vice- President, L&T (Financial Services), said.

However, nothing specific has been decided, L&T officials said. There were up to five asset management companies in the market at this point, said Sivaraman, though he denied clarifying whether L&T Finance is in talks with any of them. Any acquisition would require a nod from the Securities and Exchange Board of India (SEBI).

He was replying to a question on whether the company, which has floated its public issue of non-convertible debentures (NCDs), will use a part of the funds to buy DBS Cholamandalam Asset Management Company (DCAM). The NCD issue has been oversubscribed 3.86 times, brining in an estimated Rs 1930.84 crore, said officials.

DCAM, a subsidiary of Cholamandalam DBS Finance, is a joint venture between India's Murugappa Group and Singapore's DBS Bank, established in 1996. The company manages funds in excess of Rs 2,000 crore as on May 2009, according to Association of Mutual Funds of India data.

DCAM offers 18 schemes and covers an entire range of cash, debt and equity asset classes. It had posted a loss before tax of Rs 5.32 crore in the first quarter of the current fiscal, according to industry sources.

Non-convertible debentures are debt papers, which cannot be converted into equity. The company has said that total subscription was worth Rs 1930.84 crore, according to a release from the company.