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Country's largest mutual fund: IFC to invest $5 million in Abamco

KARACHI (September 22 2004): Abamco Composite Fund became the largest mutual fund in the private sector amounting to Rs 3.3 billion following the commitment of International Finance Corporation (IFC) to invest $ 5 million in it.

Najam Ali, chief executive officer of the company, told reporters on Tuesday that in line with Abamco's efforts to encourage and promote foreign investment in Pakistan's Capital Market, it offered an option to International Finance Corporation (IFC) to subscribe to the certificates of Abamco Composite Fund.

“It is our privilege to announce that under this option IFC is investing $ 5 million (equivalent to Rs 300 million approx) in Abamco Composite Fund,” Najam said.

He said that IFC's participation in Abamco Composite Fund was a welcome move in the wake of the developing mutual fund industry in Pakistan.

Foreign participation in mutual fund industry, especially by institutions of IFC repute, can give this industry the required depth and can pave the way for future economic development in the country, Najam said.

He said that the development of mutual fund industry is essential for a stable stock market in Pakistan as the mutual funds funnel investment of masses into the stock exchanges, which in turn provide stability to the bourses.

“The initiative taken by IFC towards uplifting the mutual fund industry in Pakistan is visible from the support it has extended to this industry from time to time. IFC, apart from being a joint venture partner of Abamco Limited, has also participated as a Pre-IPO investor in our BSJS Balanced Fund in 1996 and as a Core Investor in our Unit Trust of Pakistan in 1997,” said Jahangir Siddiqui, founder of Jahangir Siddiqui Group, the statement of the company said.

As always, Abamco took the initiative to launch the first largest closed-end fund in the history of Pakistan. Abamco Composite Fund, being the first largest closed-end fund in Pakistan, follows a “large cap” investment strategy (investing primarily in large market capitalisation companies) and has a total paid up capital of Rs 3 billion, which shall now be increased to approximately Rs 3.3 billion.

“Abamco's faith in Pakistan's Capital Market is reflected from its incessant contribution towards the mutual fund industry by always being one step ahead in bringing new products,” said Najam, Chief Executive Officer of Abamco Limited.

Abamco is Pakistan's first and the largest asset management company in the private sector. The company has two foreign joint venture partners being AMVESCAP Plc, being one of the world's largest fund managers with assets under management of over $ 370 billion, and International Finance Corporation (IFC), the private sector arm of the World Bank Group.

It is beyond any doubt that during the last few years, there has been an unprecedented interest and an impressive growth in the mutual fund industry in Pakistan.

The Securities & Exchange Commission of Pakistan (SECP) has played a pivotal role towards the growth of this industry. There are 13 open-end mutual funds and 16 closed-end mutual funds with total fund size of over Rs 93 billion in Pakistan.

However, compared to other countries, the mutual funds industry in Pakistan is still in its nascent stage and has a lot of room for growth.

The potential of investment through mutual funds is several hundred billion rupees foreign investment, and domestic savings should be directed into the mutual funds, giving it strength to sustain returns over a long term period.

Najam said that soon the interest rates would be stabilised and issue of CVT would be absorbed, helping the market to come out of the present bearish spell.

“The company hasn't utilised all the funds at the composite fund and in other mutual funds of the group and still has liquidity, waiting for the right moment to enter the market,” he said.

Out of Rs 3 billion, only 35 to 40 percent of the funds has been invested. Several plans are in the pipeline and would soon offer good innovative products for the general public, which would become effective tool for mobilising small investors, he said.

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