Kleinwort sets sales sights on Indian market: Tata Group backs new investment trust that hopes to raise pounds 100m

KLEINWORT Benson is joining with one of India's biggest and best- respected companies to launch an investment trust for Indian investors.

Kenneth King, Kleinwort Benson's head of international equity investments, said he hoped the backing of the Tata Group would enable the fund to raise about pounds 100m for investment in Indian stock markets.

It will be one of the first private sector funds to compete with the public sector companies, notably the Unit Trust of India.

Tata's wide-ranging interests include steel, chemicals, energy, hotels and lorries, and together represent about 2 per cent of India's gross national product. The group is keen to expand its financial services and computer businesses.

Kleinwort Benson Investment Management will have a 20 per cent stake in the joint venture company, Tata Asset Management. KBIM's Derek Condon will be the new firm's first managing director. Advice on stock selection will come from Tata's Investment Corporation of India.

Mr Condon said the Tata group's various quoted companies had given it a strong distribution network through stockbroker connections.

Tata also has one of the best names in Indian business. The Independent's obituary of JRD Tata, who died in November after heading the group for more than 50 years, said: 'Under JRD all Tata group companies were synonymous with good planning, efficiency and above all, honesty.'

Kleinwort Benson is one of many foreign institutions chasing the business opportunities thrown up by India's economic reforms. Economic growth is expected to exceed 5 per cent this year; Foreign & Colonial, the fund manager, has forecast a 55 per cent rise in Indian stock markets.

The first fund from Tata Asset Management is aimed at India's retail investors, whose number is estimated at about 30 million and is expected to grow rapidly. The fund will not be able to accept investments from non-residents.

However, the Indian community in Britain is showing great interest in investing in India. Mr King said that, because of Kleinwort's involvement in Indian privatisations, 'we have had phone call after phone call from Indians in Britain who want to be involved'.

KBIM hopes to cater for this interest this year by launching an investment vehicle for UK investors, particularly aimed at institutions.

Foreign & Colonial and Martin Currie, the Scottish investment manager, have already raised large funds to invest in Indian markets.