Indian economy is growing at an average rate of ~ 8.6% since last four years. We started from ~ 14K so far as sensex is concerned and closed the year with 20K which depicts a whopping rise of 47%. Indian share market is the most favored destination for Foreign Investors, Private Equity, Individual Investors and even global companies are desperate to enter into India be it Telecom, Power, Retail or any XYZ industry. Last year, we saw many new and unique mutual funds raising money from the market like – Indo – China Fund, energy Fund, power Fund and so on. As the name of the funds suggest, these mutual funds will invest in the specified destination or sector and their focus is only towards them. Energy and power sector is booming in India and Prime Minuster Manmohan Singh is also determined to almost double the investment in power over the period of five years. Sighting the strong determination of government towards energy and power sector, the fund managers does not want to give these opportunities a miss and hence they are lining up with investment in power and energy sector.

Amidst all these categories of funds, recently a new mutual fund offer is floated in the market (closing on 15th Jan 08) by Birla Sun Life named as Birla Sun Life Special Situation Fund. This is a unique fund and first of its kind in India. The fund will target those companies in which there are chances of value unlocking due to announcements made by management regarding takeover, merger, follow on offer or stake sell off. The year that passed by saw many such situation like ICICI follow on offer, TATA – Corus deal and many more. For example, ICICI made a follow on offer at a price higher than at which their shares were traded in the market. In order make money through arbitrage, investors started purchasing shares and suddenly, the price of ICICI shares rose to fill the gap between price of shares trading in the market and that of Follow on offer. This is just one of the cases and due to increasing number of deals being closed in India, there are many such situations which leads to sudden rise in share prices. So, this fund will specifically target such situations and companies.

For the first time this type of fund is being launched in India but these funds has a healthy history in UK and Fidelity Special Situation Fund of UK is ranked as the most successful fund for a record number of 26years.I expect Birla Sun Life Special Fund to fare well in India too and investors can expect smart return on their investment. This is good opportunity for the investors and they can try their luck in this unique fund which will help them to reap the benefit of special situations like merger, delisting, takeover and so on.

Disclaimer: The author has no personal interest in the fund and he does not hold any stake in the fund.

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