Financial Daily from THE HINDU group of publications
Monday, Jul 25, 2005
Columns - Mutual Confidence
Alliance bid adieu note
IF you are a collector of investment memorabilia, chances are you will treasure the latest annual report issued by Alliance Capital MF - the very last one, considering the imminent transition of its schemes to Birla Mutual Fund. And if you at any point of time made good money by investing in Alliance '95 or in any other fund managed by the fund house, a look at the annual report may well bring back a flood of happy memories.
But happy memories really have no place in the cruel, unforgiving world of investments, so let's simply focus on the annual statement that is now in the hands of unit holders. It throws up quite a few interesting factoids about the fund that is saying good-bye to India.
Not all of these may be relevant for investors who have stayed put in the Alliance schemes. Nevertheless, they tell their own tale.
Consider, for instance, the auditors' report that draws attention to Alliance '95's investment in an unlisted security issued by an associate pursuant to de-merger and amalgamation of the investee company. Mind you, SEBI norms state that no MF may invest in any unlisted security issued by an associate. The companies in question are Jindal Iron & Steel and Jindal South West Holdings. Interestingly, a director of the latter is also an independent director of Alliance Cap AMC.
Similar disclosures pop up elsewhere in the annual report. Did you know Alliance Capital Tax Relief '96 paid a princely sum of Rs 306 to IDBI Capital Markets during 2004-05 as brokerage for procuring subscriptions? Again, a case in point is that an independent director of the AMC is on the board of the IDBI-promoted outfit.
For the record, Alliance Capital has informed that SEBI has given an NOC to the `transfer' of its schemes to Birla MF, and that it is in the `process of transitioning' them. In reality, this marks the end of a long story, characterised, inter alia, by an announcement (in October 2004) that Alliance has reached a pact with the Birlas on the transfer. The fund house has 13 schemes in its stable, including the original `The Alliance '95 Fund'.
The story that began in 1995 has been punctuated sharply on a few occasions. A couple of things particularly stick out. One, the zeal with which investors accepted Alliance New Millennium, the technology fund which was flagged off during the height of the IT boom. The scheme is still available in its original form - a few other tech funds have been converted to diversified products. Two, the regulator's decision (in April 2004) to ban high-profile fund manager Samir Arora for five years for allegedly following unfair practices, including insider trading. The Securities Appellate Tribunal later quashed charges against him.
The point is Alliance is not the first fund house to have moved out of India. Zurich did it earlier, while Pioneer's JV with the Kotharis was sold to Franklin Templeton. In fact, such walk-outs (and walk-ins) will keep on happening. These make the asset management sector a happening place; new players bring new options for investors to choose from.
The Alliance management has hinted that Birla MF's "near term plans" are to preserve the identity of the new arrivals. Let us see how well it handles the responsibility.
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