AIG to launch India asset management arm

Mumbai-based mutual fund receives approval from Indian regulators to set up shop.
AIG has officially entered the Indian asset management business, receiving approval from the Securities and Exchange Board of India (Sebi) to set up shop in the country. Based in Mumbai, AIG Global Asset Management Company (India) plans to officially launch its first fund in April.

It is the most recent of a wave of new entrants to IndiaÆs funds market, including Axa Investment Managers and Pioneer Global Asset Management, which have announced joint ventures this year with Bharti Enterprises and Bank of Baroda, respectively. But AIG, which has the luxury of an onshore insurance concern with assets to manage, is going in alone.

The new business will be run led by Saurabh Sonthalia, who will take on the reins as chief executive officer. He was appointed by AIG to the post in mid-2006 and joined from DSP Merrill Lynch Fund Managers, where he spent 16 years in investment banking, private equity and asset management. His most recent title there was executive vice president and head of strategy and business development.

Tushar Pradham will join as chief investment officer for equities and Sridhar Narayan as CIO for fixed income.

Pradham brings experience from HDFC Asset Management, where he worked from 2000 to late 2006. Most recently, he was senior fund manager at this firm where he was responsible for handling six open-ended equity and hybrid mutual fund schemes. Pradham also worked at HDFC (the bank) from 1995 to 2000.

Narayan joins the start-up from within the AIG family, having worked in the parentÆs India liaison office for the past five years. Prior to this role, Narayan worked for Zurich Asset Management India and ITC Threadneedle Asset Management.

Pradham and Narayan will be joined on the investment team by Huzaifa Husain, who takes on the role of fund manager, equities. He joins the firm from joint venture Tata AIG Life Insurance, where he worked for two and a half years. Husain also worked for Principal PNB Asset Management between 2000 and 2004 and for SBI Funds Management for the three years prior.

According to Sonthalia, AIG Global Asset ManagementÆs first fund in India will be a diverse equity fund, which as its flagship offering will consist of 100% domestic assets. He also tells AsianInvestor that the firm will look to launch more funds in the near term.

ôFollowing the launch of our flagship fund in the coming weeks, weÆll be looking to launch a whole suite of funds including equity and debt funds,ö says Sonthalia. ôAIG has been looking to establish an asset management company in India for a couple of years and the market looks very promising for us.ö

Assets under management for IndiaÆs mutual fund industry have grown dramatically over the last few years, from $34 billion in March 2005 to the current $76 billion. The household savings rate of India is 23% of GDP, of which around 3.6% is currently invested into mutual funds.

Although the venture will be based in Mumbai, AIG Global Asset Management will initially target distributors in seven major cities before expanding to the second-tier cities and regional centres.

Like other fund managers in the country, the firm will distribute its funds through banks, broker/dealers and individual financial advisors.

Outside of its new asset management launch, AIG operates a number of other business lines in India. The global financial services firm has an insurance, consumer finance, real-estate development and aircraft leasing presence in India.