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Mumbai: Morgan Stanley, trailing Franklin Templeton Investments and Reliance Capital Ltd. in India, will start its first fund on the subcontinent in 14 years to win clients in a nation where investments may quadruple by 2012.
The New York-based bank plans to start an equity fund that will go on sale from February 11 until March 10, according to the sale document. The offering coincides with the worst start to the year for Indian equities, making it tougher for the US bank to attract investors.
The benchmark Sensitive Index, or Sensex, dropped 13 per cent last month.
"We view the recent correction as an opportunity to build a portfolio," said Narayan Ramachandran, chief executive officer at Morgan Stanley Investment Management India Pvt, in an interview on Friday. "Maybe we missed a step for three to four years, but still it's better late than never."
Overseas money managers are vying with local funds to set up businesses in India to tap the wealth of a nation where invested assets will rise fourfold to $1 trillion by 2012 according to consulting firm Celent.
Comparison
Less than one per cent of Morgan Stanley's $606 billion of assets under management are held in India, where local firms led by Reliance Capital and UTI Asset Management Co. manage four times more than their overseas peers.
Domestic mutual funds, or joint ventures in which the local partner has a majority stake, manage Rs4.32 trillion ($109 billion), while foreign fund assets are at Rs1.17 trillion, according to data from the Association of Mutual Funds of India. Assets managed by all the 32 mutual funds rose 70 per cent to Rs5.50 trillion in 2007 from a year earlier.
Morgan Stanley, which in January 1994 became the first foreign money manager to start a business in India, has focused on investment banking and broking in the country after its asset management business had a rocky start.
The Morgan Stanley Growth Fund, the firm's only one in India, attracted more money than it could manage when it was launched in January 1994. Under securities regulations it had to invest all the funds within a few weeks of the fund closure, leaving little room for the money manager to choose at what price to buy.
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