Investment Companies in India: A Detailed Overview
Over the years, India has maintained its position as one of the best hub for investment opportunities. Being the 5th largest economy in the world and the 3rd largest economy in Asia, it has diversified its economy to and repositioned herself to accommodate several businesses including investment companies sector.
Investment companies are those companies scheduled with the responsibility of issuing securities and is a major player in business investments. Their major mode of operation is to invest the monies received from investors with a corresponding distribution of the profit and losses accrued to the respective investors based on the amount invested.
The growth of any Investment Company is measured by the assets and securities it has.
Indian government and the Investment Companies
The Indian government oversees and controls the Investment Companies in the country through the Foreign Investment Promotion Board (PIPB). The PIPB is vested with the responsibility of facilitating and encouraging both local and foreign direct investments into the country.
Foreign direct investment in India is carried out through joint ventures, technical and financial corporations, preferential allotments or private placements and capital markets.
Each foreign direct investment is subject to clearance by the PIPB before it is approved by the Indian government.
Limitation of Foreign Direct Investment in India
Foreign direct investment is disallowed in stock markets and real estate sectors in India. Other sectors that foreign direct investment is prohibited include atomic energy, coal, lignite and mineral mining, railway transport, arms, and ammunition. Each potential investor is critically assessed to ensure that his investment does not fall into the prohibited list before he is cleared by the PIPB.
Asset Management in India
Asset management companies in India have continued to meet the industries needs over the years despite the growing global economic challenges since the year 2008. So far, these companies have recorded great profits in their endeavors. An asset management company performs nearly the same functions as an investment company since both invest funds received from investors into equities and securities that tally with the financial responsibilities of the companies.
List of Top Asset Management & Investment Companies in India
India has several investment companies all over the country, this list will concentrate on the most outstanding ones.
Bajaj Allianz General Insurance Company Limited.
Bajaj Alliance General Insurance Company Limited is in partnership with Bajaj Finserv Limited and Alliance S.E. This company is rich in numerous investment products and services with the vision and commitment to providing maximum insurance coverage to its shareholders.
Alliance Bernstein Investment Research and Management (India) Private Limited:
This Foreign investment company offers several investment services for different assets. Their vision is to utilize their research tools for driving information and knowledge across all investment companies.
As a part of the Barclays Bank Plc, this investment company is responsible for meeting the needs of corporate organizations and Small and Medium-Term Enterprises (SMEs) in India. They oversee Indian Companies with the mission of reaching into the global market.
The Capital Group is a part of the American Group of Companies located in the Indian city of Mumbai. Their aim is to provide financial services to investors in the Indian financial sector.
I.L. Fund Management Private Limited:
Established in India in 2004, this company offers investors several investment opportunities in the form of equity funds, hybrid funds and much more. They have a robust team that is committed to satisfying the needs of the investors.
Infrastructure Development Finance Company Limited (IDFC):
I.D.F.C is focused on delivering premium quality infrastructural services to the Indian populace. They are also into investment banking, private equity, securities, project finance and much more.
Larsen & Toubro Mutual Fund:
Also known as L&T, this company provides a variety of mutual fund benefit services to the Indian investors. It rated among the biggest financial services providers in the country.
Peerless General Financial & Investment:
This company has a strong presence in all the districts of India. Peerless General Financial & Investment uses cutting-edge technology to carrying out its operation, they provide customers with up-to-date business investment guides. Their clients benefit from their list of products especially its wealth management course.
Tata Investment Corporation:
Tata Investment Corporation operates as a non-banking institution with the aim of offering long-term financial investments. It is among the financial investment services providers that feature in the Mumbai Stock Exchange.
Toss Financial Services:
This investment company is involved in providing cutting-edge services in stock brokerage, portfolio management, investment management, mutual fund, investment advisory and much more. It features in the National Stock Exchange of India.
UTI Asset Management:
Being the oldest provider of assets in India, UTI Asset Management Company is a subsidiary of the State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation.
Birla Sun Life Asset Management
As one of the leading financial and asset management company in India, its parent company known as Sun Financial group and Aditya Birla Group are among the top insurance services providers in Canada. They offer services in wealth creation, savings, tax savings and regular income management.
this company is one of the most successful in the Indian financial market. It operates as Reliance Mutual Fund which is owned by the Reliance Group. It has its foot in 179 cities in India.
Franklin Templeton has been in operation across cities in India since its inception in 1996. It was created as Templeton Asset Management India Private Limited, but its business of mutual fund started as Templeton India Growth Fund.
Sundaram Asset Management Company Limited:
Established in 1996, Sundaram Asset Management Company Limited is a subsidiary of Sundaram Finance which is among the oldest non-financial operating companies in India. The company has its operational base in London, New York, Dubai, San Francisco, California, Singapore, and Dubai.
ICICI Prudential Asset Management Company Limited:
this company is a joint venture of the Prudential Plc residing in London. Since its establishment in 1993, it has become one of the biggest financial players in India. Its major services include investment advisory, portfolio management and mutual fund management. It has witnessed astronomical growth over the years with presence in over 150 cities across India and staff strength of 500 employees.
The 1940 Act for Investment Company
In India, the 1940 Act of Investment Company was promulgated by the Congress with a view to;
- Protecting the interest of the investing public;
- Safe guide their investment in Investment companies.
The 1940 Act prescribes the guidelines to be followed when registering an investment company. In addition, the Act clearly states how the sector would be regulated. For instance, if a Company owns or trade in financial instruments and 40% of its resources are invested in securities, such a company is expected by law to register as an investment company with the Securities and Exchange Commission (SEC).
Please note that this registration must take place on or before the expiration of 90 days after some requirements must have been met. The requirements as clearly stated under the 1940 Act are that the Investment Company must have over 100 investors with at least a capital of $100,000. Other requirements are that the company must have clearly defined objectives and must not have more than one security class.
The 1933 Act for Securities
After a company must have complied with the Investment Company Act of 1940, registration of its traded securities with the Security and Exchange Commission would then be considered. The registration with SEC is in line with the 1933 Securities Act, which is divided into two categories viz;
- Statement of Additional Information
A Prospectus is the documents that must be made available to potential customers during the process of buying securities. A Prospectus contains information such as;
- Prospectus’ date
- The primary objectives
- Philosophy of the fund
- The sponsors and management of the company
- A disclaimer bearing “the Securities and Exchange Commission has not approved or disapproved these securities nor has it passed on the adequacy or accuracy of this prospectus. This offering has not been approved or disapproved by any State. Any contrary representation would be viewed as a criminal offense.”
- Expenses inherent in the process of owning mutual fund’s shares.
Please note that under the Securities Act of 1993, it is mandatory for the requirements to be applied on a continuous basis since mutual fund’s shares are offered as new issues. It is expected that each fund’s prospectus must be updated every 13 months
In addition, shareholders updated semiannual report consisting of the following must be forwarded to the advisory board and the board of directors;
- Sales and purchases
- Balance sheet
- Compensation paid
- Income statement
One of the reports to be submitted must be an annual report that has been audited.
Statement of Additional Information
Under the 1933 Securities Act, the Statement of Additional Information is the second category when registering an investment company with the Securities and Exchange Commission (SEC). It is expected that;
- The document must be inspected by members of the public
- The document shouldn’t be made available to every potential customer
- Upon request by an investor, the Statement of Additional Information can be obtained from the company.
Making deals with this companies at any level requires proper contact and negotiating with the firm’s team of professionals to ascertain their terms of for an investor. It is the interest of these companies that you derive the best out of your investment opportunity with them. It is their responsibility to safeguard your investment by ensuring that your deals are always on the rise with the intent of providing you with the best returns.
In as much as your money is in the hands of these Investment Companies, you are guaranteed of prompt response in a moment of emergency and assistance in times of financial crises.
India has maintained its reputation as the perfect investment center in any sector of the economy. Among the numerous advantages it has is the huge working population which can impress an investor in terms of patronage and workforce.
Due to the enormous potentials in the market, India is open to any investor around the globe to become a part of its Investment Companies and a strong player in its financial and economic growth.