Dutch banking group ABN Amro is ready to foray the mutual funds business in India. It has sought government approval to set up a new subsidiary for the purpose.

The asset management company, in which ABN Amro will hold 75 per cent stake -- the balance being held by resident shareholders, will undertake asset management, portfolio management, investment management and advisory services, investment research and financial consultancy services, etc. ABN Amro will soon seek appropriate approval from the Securities and Exchange Board of India for the purpose.

ABN Amro has already approached the foreign investment promotion board to seek approval for the new company.

Government sources said ABN Amro has said that it will initially make an investment of $5 million towards its asset management operations.

The company also said the domestic asset management company will create a mutual fund with schemes that will seek to give the investors attractive performance. It will launch MF schemes dedicated to equity as well as debt.

The new asset management business will be headed by Nikhil Johri, who will be appointed chief executive officer. Johri is currently senior vice president in the company.

The banking group already had government approval to undertake the MF business through ABN Amro Securities India Pvt Ltd when it was granted permission to act as a primary dealer in 1998.

However, the asset management activity, portfolio management and research and investment advisory services for which approval had been received were never undertaken by the company.

The company said ABN Amro Securities does not meet Sebi criteria to be eligible to sponsor mutual fund and carry out asset management activities in India.

The asset management SBU of ABN Amro is one of the world's leading asset managers with significant experience in managing assets for private and institutional clients, including central banks, pension funds, insurance companies and other institutions.

A rapidly growing business unit, it has a local presence in 30 countries and employs 2,000 people worldwide.

The asset management SBU manages euro 148 billion (as on March 31 2003) in segregated accounts and in over 400 mutual funds.

In India, ABN Amro has a significant presence in the banking business with branches in several cities. Downstream firm ABN Amro Securities India Pvt Ltd undertakes merchant banking and underwriting activities and also operates as a primary dealer in government securities. ABN Amro Asia Equities India Ltd undertakes stock broking activities on the National Stock Exchange and the Bombay Stock Exchange.

ABN Amro Asia Corporate Finance India Pvt Ltd undertakes corporate finance advisory services. ABN Amro Central Enterprise Services Pvt Ltd provides data processing and back-office support services to ABN Amro Group entities.