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ICICI Power turning open-ended -- New flexible lifetime investment scheme

Our Bureau

KOLKATA, July 2

ICICI Power, launched in 1994 in a close-end form, is being converted into an open-end fund, subject to approval from the Securities and Exchange Board of India.

In its converted state, Prudential ICICI Power, as the scheme would be known, would provide investors with a `Flexible Lifetime Investment Programme', a facility to enable a unitholder to change his or her allocations among open-end schemes of Pru ICICI Mutual Fund.

The scheme, as a result of the conversion, would be de-listed from the stock exchanges in Delhi, Mumbai, Kolkata, Chennai and Ahmedabad. After de-listing, unitholders would be able to buy or sell units directly from or to the fund.

Mr Dileep Madgavkar, Chief Investment Officer, Pru ICICI Mutual Fund, said there would be ``no immediate changes'' in the investment strategy of Pru ICICI Power.

Referring to the offer document for conversion sent to the securities regulator, he said that the fund's investment universe would comprise the core sectors and feeder industries.

Broadly, the scheme would invest in areas such as energy, communications, construction, financial services and software. It would also pick stocks from such feeder industries as oil and gas, power, commercial vehicles, telecommunications, steel and cemen t.

Unitholders of ICICI Power would continue to be unitholders of the converted scheme. After the changeover, an entry load of 1.75 per cent with respect to all new purchases would be charged.

Also, there would be a cumulative option for all investors. Under this, no dividend would be declared -- an option suitable for those who are not looking at receiving regular income.

If units held under the cumulative option are redeemed after they have been held for a period of at least one year, unitholders would get the benefit of long-term capital gains tax. The trustees, the offer document clarifies, might later decide to introd uce dividend/dividend re-investment options.

ICICI Power, which had mobilised around Rs 90 crore during launch, was the second scheme from the erstwhile ICICI MF. The first, ICICI Premier, was introduced in 1993, and was rolled over for a period of five years in early 1999. It is now open for repur chase.

ICICI Power's net assets at the close of the period ended March 31, stood at around Rs 34 crore, and the ratio of recurring expenses to net assets at 2.5 per cent.

Flexible Lifetime Investment Programme

A KEY feature of the conversion offer is the unitholder's ability to move part or all of his or her investments between open-end schemes of Pru ICICI MF. A unitholder, therefore, would be able to tailor investment according to specific situations.

Such schemes include equity offerings, involving Pru ICICI's growth, tax-saving, technology and FMCG funds.

This feature, according to the MF, would be utilised by investors to adjust allocations among various schemes in tune with changes in circumstances or modifications in their risk profiles.