Alliance Capital to retain ownership interest of its Indian arm

Samir Arora, the current chief investment officer, will continue to act as the CIO and remains as the head of Asian emerging market equities for Alliance Capital globally.

Alliance's move has put to rest persistent market talk that HDFC Mutual Fund is all set to acquire Alliance Capital Asset Management India. Arora was also reportedly bidding for the Alliance's assets in India.

Alliance Capital chief executive officer Nikhil Johri says it has completed its review of strategic alternatives for Alliance Capital Asset Management India. “After evaluating all options, it has been decided that the fund will continue its operations in India.“

Says Alliance Capital president and chief operating officer John D Carifa: “The strategic review convinced us even more firmly that the growth potential of the dynamic Indian market is simply too substantial to ignore.“

But industry sources say Alliance has revived its plans to sell its Indian assets because the assets under management of the fund has reduced drastically to Rs 2,000 crore from the earlier Rs 3,200 crore, registering a drop of Rs 1,200 crore during the last one month period. Alliance feels that the erosion of assets would lead to a low valuation for its Indian operations, if the mutual fund sells its assets at this juncture.

Johri says the company's assets under management (AUM) have reduced considerably due to immense redemption pressures and heavy losses. “AUM have declined from Rs 3, 200 crore to Rs 2,500 crore, registering a fall of Rs 800 crore.“