Old Mutual of South Africa to partner Kotak MF

MUMBAI: South Africa’s largest insurer Old Mutual, which manages £263 billion in assets worldwide, will soon enter into a tie-up with Kotak Mahindra Mutual Fund. The group will enter into agreement with its joint venture partner Kotak Mahindra Group to facilitate Indians investing overseas. Likewise, Kotak Mutual Fund will facilitate investments by Old Mutual in India.

This follows a move by the Securities and Exchange Board of India (SEBI) to increase the overseas investment limit by individual mutual funds to $300 million from $200 million. The Reserve Bank of India’s (RBI) new measures for mutual fund investments have raised the ceiling of money for all mutual funds to $5 billion from $4 billion earlier.

Old Mutual will make available its fund management expertise in the US, UK and South Africa to investors in India. Old Mutual is also looking at investments in real estate in India. The group already has an investment in the Mumbai airport and is now looking at developed office spaces.

Speaking to newspersons on Old Mutual’s plans in India, Old Mutual chief executive officer Jim Sutcliffe said that the group had significant investments in satellite assets. These assets are managed by specialist fund managers and investments are ranging from forests in the US to shopping centres and malls in South Africa. The company manages real estate through two group companies — Heitman in the US and Old Mutual Properties.

Despite concerns over a housing price bubble in some places in the world, Old Mutual continues to see opportunities in real estate. “Any place, where there is a limitation of land, will see land prices go up. But you have to take a long-term view,” he said.

Old Mutual has invested in commercial spaces adjoining a new railway line between Johannesburg and Pretoria. “Such real estate investments have nothing to do with subprime or real estate risk,” he said. Commenting on Kotak Life, where Old Mutual holds 26% stake, Mr Sutcliffe said that he was expecting business written by

Kotak Life Insurance to go up 10 times. He said that Old Mutual was looking forward to increase its investment in the life insurance company to 49%. Analysts are currently valuing Old Mutual’s insurance business in India and China at £ 260 million.