The Hindu Business Line : From riots to FIPB nod: Sareshwala makes a statement

FOR Mr Zafar Sareshwala, it was a second stint at fund management when the Foreign Investment Promotion Board (FIPB) granted clearance to his Ahmedabad-based Islamic fund management company, Parsoli Corporation Ltd (PCL) on July 12 to buy out Parsoli plc, UK for a consideration of Rs 10.25 crore.

Consider this: His house in Ahmedabad was burnt in the Gujarat riots of 2002. His business, which at that point of time had a 250-strong client base and a net revenue of over Rs 3 crore, folded up as his office became inaccessible for weeks thereon. The NSE, where Parsoli was a corporate trader, had no option but to invoke guarantees against the company as it failed to honour its commitments.

Mr Sareshwala's Indian initiative was as good as finished and he chose this period to work on a thesis that was close to his heart — an Islamic fund catering to the investment needs of the 14 million Muslim population in Western Europe.

To begin with, he chose to target his 2 million-strong brethren in UK. What helped him was that he had set up a base in Yorkshire during 1996. "In April 2002, I was invited by the Harvard University to present my paper on the global Islamic equity fund and other investment opportunities for the Muslim world in step with the principles of shari'ah. Soon enough, we launched this fund, which incorporated the first individual savings account (ISA) compliant Islamic equity fund which is now listed on the Financial Times Stock Exchange," Mr Sareshwala said.

Simultaneously, he began the slow grind of trying to woo back the company's Indian clientele, which had as many as 56 Hindu investors when the riots broke out. The one conscious decision that PCL took was that it would not shift base to Mumbai where it had a full-fledged office but try and rebuild itself in Ahmedabad. Not without reason as Mr Sareshwala believes the Indian Muslim investible surplus will touch $ 3 billion by 2007. "Having carved out a strong presence in UK, especially with the recently-forged brokerage ties with Fyshe Crater for online trading on the UK bourses, we are getting ready to move into Germany by September.

He has laid out plans to raise PCL's UK operations from the current level of £1,80,000 up to £250 million over the next four years.

The message is clear — the company would continue to grow globally but its headquarters would be Gujarat.

Mr Sareshwala is planning to raise fresh capital in India either through an IPO or private placement in order to meet the SEBI guidelines on networth at Rs 20 crore to float an asset management company. With the acquisition of Parsoli, UK, it now stands at Rs 16 crore. "We are also in talks with Ulemas across the State in a bid to convince them that life insurance for Muslims is mandatory," Mr Sareshwala said.

In the meantime, Parsoli has set itself the modest target of a 1,000-strong investor base over the next five months and is holding out the lure of trading in the UK bourses up to the $ 25,000 ceiling by Indian investors. On the flip side, it has vetted some 40 Indian companies to be shari'ah compliant including Wipro, Infosys, Hero Honda, Bajaj Auto, Ranbaxy, German Remedies and the local company Cadila Health. For those entities that are yet to break into the club of Islamic Equity Fund, here are some pointers: Debt should not exceed 33 per cent of the company's market capitalisation and receivables to stay below 45 per cent of the company's total assets.

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