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UTI mulls DIFC foray and tie-up with UAE institutions

DUBAI — Unit Trust of India (UTI) the oldest fund manager in India with $5.6 billion assets under management has plans to set up operations in the Dubai International Financial Centre (DIFC) through UTI International, its fully owned offshore subsidiary. The company plans to enter into strategic tie-ups with UAE-based financial institutions to offer India focused investment products in the GCC markets.

Asked about UTI's plans to set up in DIFC, U.K Sinha, Managing Director of UTI said, “The capital market regulations does not permit me to give any further details at the moment. However, I can confirm that we are in talks with the DIFC.”

Sources close to the company have confirmed that UTI is in negotiations with DIFC to set up operations of its offshore unit, UTI International Ltd inside DIFC. UTI International is incorporated in Guernsey, Channel Islands and is regulated by the Guernsey Financial Services Commission. The London Branch is authorised and regulated by the Financial Services Authority (FSA) in the United Kingdom. The offshore unit also has offices in Dubai and Bahrain. The Dubai office is regulated by the Central Bank of UAE while Bahrain branch is regulated by the Bahrain Monetary Authority.

The offshore entity recently got licence to operate as a Foreign Institutional Investor (FII) on the Indian capital markets, clearing the way for it to offer a host of off-shore funds, wealth management products and specially structured financial products targeted at institutional investors and high networth individuals.

“We can offer almost any financial product that is regulated and are legal . We do not offer hedge funds at the moment because these are not regulated,” he said. Currently UTI is working on the launch of a private equity fund, which will be focused on emerging infrastructure opportunities in India. In addition, the company plans to come out with Capital Guaranteed products. “There is huge interest from the GCC investors, particularly the institutional investors keen on taking exposure in the Indian market.”

To cater to the growing demand for Shariah base products in the region, UTI is also working to offer Islamic investment products based on underlying Indian assets. UTI International plans to open more branches in GCC countries and the US. UTI is also scouting for a strategic partner in the UAE. “We have been in talks with a few leading finance companies and within next 3 to 4 months we hope to have a few strategic partners in the region including the UAE.

Until recently owned by government of India, UTI is now a private sector mutual fund owned by four of the largest Indian banks and financial institutions, namely The State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India are the Sponsors of UTI Mutual Fund.