India's Edelweiss to launch first fund by July

The fund unit of Indian financial services firm Edelweiss Capital expects to launch its first product in July and aims to break into the top 10 firms by assets in three to five years, a top executive said on Monday.
"We are looking at a few fixed-income funds to start with," Rujan Panjwani, director of Edelweiss Asset Management, told Reuters in a telephone interview.
The firm, he said, had put in place a team of 90 people, including 12 on the investment management side, spread across 14 locations and would expand the product basket to about 10 funds in the first year of operation.
"For the first 12 months we don't necessarily have an AUM target... in the longer term, we should aim to be in the top-10," said Panjwani.
The firm said earlier on Monday it has received regulatory approval to launch mutual funds, marking its entry in an industry that has seen assets more than triple to 5.7 trillion rupees in the last three years, attracting global players.
While Morgan Stanley launched a fund after a gap of nearly 14 years in February, the fund arm of the world's top insurer American International Group Inc and JPMorgan launched their Indian fund operations last year.
At least six brokerages, including Edelweiss, are among the more than 20 players looking to break into the 33-member Indian fund industry, whose assets will more than triple to $520 billion by 2015, according to the Boston Consulting Group.
Players are tapping into rising savings as the economy booms and where double-digit salary hikes are common in sectors such as real estate, information technology and financial services.
"It's an extremely large opportunity given the current penetration levels of asset management products in India and we think that it has space for lots of people," Panjwani said.
McKinsey estimates top eight Indian cities account for three-quarters of the retail mutual fund assets, and local brokerages with a greater reach could bring in more investors.
"The retail segment will be the largest contributor to the growth of the asset management industry in India," it said, adding it expected 35-42 percent compounded annual growth over the next five years.
For many local brokerages which already offer portfolio management to wealthy clients, and have nation-wide networks, diversifying into the funds business is a natural move.
"It's a hugely untapped market and given the demographic profile in India, given the growth that we are witnessing in the country, it's a space likely to explode," Panjwani added.
Celent, a financial services consulting firm, expects 42 million households will become consumers of wealth management products in the next five years from 13 million now if the country maintains economic growth of 8 percent.
In a report released in December, Celent said India's wealth management space would see assets quadruple to about $1 trillion by 2012, channelling huge amount of money into financial sector and spurting demand for products giving access to the segment.
Shares in Edelweiss Capital rose 3.7 percent on Monday in a weak Mumbai stock market that shed 0.62 percent.