Reliance MF buys 5.23% stake in FT from Fidelity

Reliance-Anil Dhirubhai Ambani Group (ADAG) company Reliance Mutual Fund today bought 5.23 per cent stake in Financial Technologies, the promoter of India’s largest commodity exchange, Multi-Commodity Exchange of India (MCX). The shares were bought from the Fidelity group at Rs 502.50 per share. The deal values FT at Rs 2,304 crore.
The FT share price today went up 8.69 per cent to Rs 567 on the Bombay Stock Exchange, resulting in a market capitalisation of Rs 2,602 crore.
Fidelity, which holds 10.65 per cent in FT, sold 8.20 per cent of it in a block deal for Rs 188.80 crore. Apart from Reliance Mutual Fund, several high net-worth individual investors bought the balance 2.97 per cent.
Five years back, ADAG company Reliance Capital had purchased FT’s shares. The stakes were later sold at higher price levels.
Reliance ADAG has strategic interests in the exchanges business. Besides holding stake in the Hong Kong Mercantile Exchange, in India, the group holds 10 per cent stake in the commodity exchange — National Multi-Commodity Exchange — through Reliance Money.
It is also going to start a spot commodity exchange under its subsidiary, Reliance Spot Exchange Infrastructure, soon.
Sundeep Sikka, chief executive officer, Reliance Mutual Fund, said, “The investment will be allocated across various mutual fund schemes that are currently managed by the asset management company.”
He, however, declined to comment whether Reliance Mutual Fund had any strategic intention behind the deal or was it just another investment.
For Fidelity, this is part of a broader selling plan for some of the investments of its Indian venture. After the recent exit of Fidelity’s high-profile Indian fund manager, Arun Mehra, new managers are understood to have started selling some existing investments.
FT’s deal is one of the most high-profile deals done by Fidelity. Fidelity has been with the FT group for more than four years. It also holds stake in the FT-promoted commodity exchange, MCX.

Source: http://www.business-standard.com/india/news/reliance-mf-buys-523-stake-in-ftfidelity/353169/

MFs slowly emerging from FII dominance

If FII selling is blamed for the carnage in the last one year, increased buying by domestic mutual fund houses has seen the Indian equity market bounce back recently.
Between March 12 and 23, mutual fund houses net bought equities worth Rs 1319 crore against Rs 1093 crore by foreign institutional investors. In the same period, the Sensex has risen to 9424 from 8343.
However, the MFs may be trying to shore up their balance sheet for year end consideration, and so the increased buying. This is also because they had been sitting on cash for too long.
But does this suggest that MFs are gaining prominence in driving the indices? Domestic institutional investors have already started showing their dominance. In 2007, domestic insurance houses invested Rs 55,000-Rs 66,000 crore against Rs 50,000 crore invested by FIIs in the Indian markets.
Given the expansion of mutual fund industry, domestic fund houses can play a vital role in driving the market in the next five years, experts feel. For the month of February, the AUM for mutual fund industry stood at Rs 5,00,973 crore.
“Huge MFs buying is one the reasons for the current market rally. Huge volume buying in equities by MFs and other domestic institutions will reduce dependence on FIIs. However, it will take some time,” said Bupen Shah, a Mumbai based broker.
“No doubt domestic fund houses along with insurance companies and pension fund will emerge stronger players in the market 4-5 years down the line. Whether they will replace the dominance by FIIs remains to be seen. MFs need to increase their corpus by tapping the huge retail base across the nation,” said Sandeep Dasgupta, chief executive officer, Bharti Investment Mangers.

Source: http://economictimes.indiatimes.com/MFs-slowly-emerging-from-FII-dominance/articleshow/4319687.cms