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Kothari Pioneer goes to Nasdaq

Aabhas Pandya

Indian mutual funds are now going global with domestic dot.coms. Kothari Pioneer's Internet Opportunities Fund has become the first Indian fund to invest in the American Depository shares of an Indian company. The fund participated in the initial primary offering of rediff.com India Limited, the first Indian Internet portal to list on Nasdaq. Rediff made its Nasdaq debut on June 13.

The Internet Opportunities Fund got an allotment of 5,000 rediff.com ADRs at the listing price of $ 12 per ADR, which roughly translates into an investment of Rs 2.7 million. Rediff ADRs catapulted to $ 23.50 on the first day itself, which translates into a near hundred per cent appreciation. In the brief period since listing on Nasdaq, the rediff ADR has hit a 52-week high of $ 28, which means a whopping appreciation of 133.33 per cent on its listing price in less than a month. The low for the ADR has been $13.93.

Rediff.com mobilised $ 55.2 million by offering 4.6 million ADRs. Two ADRs make up one underlying share of rediff.com

"We had applied for a substantial amount of rediff ADRs, but only got a small allocation. The price moved up on listing. We did not feel it was worth adding at that price and hence sold our allocation," says R Sukumar, fund manager, Internet Opportunities Fund. The fund tapped investors in March and mobilised Rs 5.4 billion from over 100,000 investors.

"After rediff, we will be selectively looking at other Indian companies going in for listing at Nasdaq. Kothari Pioneer has obtained RBI permission to invest in ADRs and GDRs of Indian companies and we can invest up to 10 per cent of our total assets under management in ADRs and GDRs," says Sukumar. While the current limit for Kothari Pioneer is based on the mutual fund's assets under management as on March 31, 1999, the limit will now go up since the asset management company had a higher total corpus as on March 31, 2000.

The Securities and Exchange Board of India issued guidelines for investments by Indian mutual funds in ADRs and GDRs last October. The market regulator had set an overall limit of US $ 500 million while a mutual fund can invest up to 10 per cent of the net assets managed by it, subject to a ceiling of US $ 50 million.

Source: Value Research

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