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First week of IPO — Principal Global closes a `few hundred' deals

Our Bureau

Mumbai , March 1

PRINCIPAL Global Opportunities Fund, India's first international fund, has closed a "few hundred transactions" in the first week of its initial public offer, according to Mr Rajan Krishnan, Head (Sales), Principal India.

The fund seeks to invest in global companies, primarily in the US, Western Europe and Japanese stock exchanges. "The investment would be fairly evenly divided between the three geographies in terms of market capitalisation," said Mr Rajat Jain, Chief Investment Officer, Principal Asset Management Company Ltd.

This fund helps incorporate the principal of diversification in investors' portfolio. "If US markets are down, Japan or Europe would be bullish and vice versa. The investment in this fund would take advantage of this global cyclical phenomenon," said Mr. Jain.

The universe of stocks that the fund can invest in will be large foreign companies that have listed subsidiaries in India and hold a minimum of 10 per cent equity in the Indian subsidiary. Currently, there are about 47 companies that are eligible for investment, including Proctor & Gamble, Nestle, Bayer, Ingersoll Rand and Gillette.

"While the universe of companies that qualify for investment as per Securities and Exchange Board of India's guideline are not very high, there is sufficient diversity of sectors in the list," said Mr. Jain. These include pharmaceutical, consumer goods, auto/auto components, information technology, etc.

The portfolio strategy is two-fold: growth in corpus from active management and currency hedging returns. The fund would invest in US dollars, euro and Japanese yen. Mr Mustafa Shagun, Managing Director, Principal Global Investors, would be in charge of managing the fund and currencies and investor co-ordination and support would be maintained by Principal's India office.

"While there are some investors who are interested in the fund for the novelty of buying into global companies, largely the interest in the fund is because it is currently the only opportunity to invest outside India for retail customers," said Mr Krishnan. The IPO remains open till March 19, and a "clear picture of the corpus size and number of investors will appear only after that," he added.

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