KARACHI, Sept 21: International Finance Corporation (IFC) - private sector arm of the World Bank Group - on Monday exercised its option to invest $5 million (equivalent to Rs300 million) in ABAMCO Composite Fund , which went to create it as the single largest closed end fund in Pakistan.

"ABAMCO Composite Fund has a total paid up capital of Rs3 billion, which shall now be increased by 10 per cent to approximately Rs3.3 billion," Chief Executive (CEO) of ABAMCO Limited, Najam Ali said at a press briefing on Tuesday. He was flanked by chairman of the company, Air Commodore (retd) Munawar Siddiqui and the JS Group Head Corporate Communications, Nadia Munawar Siddiqui.

The ABAMCO chief executive said that IFC had the 'future option' to invest in ABAMCO Composite Fund within three months of its formal listing at the stock exchanges. The fund was listed on June 21 and IFC exercised its option on Monday, which was within the time limit.

IFC had invested at par value of the certificate of Rs10 each. He said that foreign participation in mutual fund industry, especially by institutions of such excellent reputation as IFC, could give the mutual fund industry in Pakistan the required depth.

Najam Ali observed that ABAMCO Limited was the first and the largest asset management company in the private sector in Pakistan, with Rs14 billion under its management, through eight mutual funds.

The company, he said, had two foreign joint venture partners: IFC and AMVESCAP Plc., the latter recognized as one of world's largest fund managers with assets under management of over $370 billion.

ABAMCO Composite Fund, Najam said follows a "large cap" investment strategy, which meant that it invested primarily in companies with large market capitalization, say over Rs1 billion.

Quoting, Jahangir Siddiqui, the founder of the JS Group, Najam said: "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 the Group's BSJS Balanced Fund in 1996 and as a Core Investor in the Group's Unit Trust of Pakistan in 1997."

Replying to various queries, Najam said that ABAMCO was the only closed-end mutual fund which was disclosing Net Asset Value (NAV) on a daily basis. Though the regulatory requirement was to report NAVs on a monthly basis, the company had voluntarily and for the sake of maximum transparency began posting NAVs on daily basis since Sept 1, on its website.

Regarding the industry overview, the chief executive of ABAMCO Limited stated that during the last few years, there had been an unprecedented interest and an impressive growth in the mutual fund industry in Pakistan.

He stated that right now there were 13 open-end mutual funds and 18 closed-end mutual funds with a total fund size of over Rs93 billion. But he went on to add that compared to other countries the mutual fund industry in Pakistan was still in its nascent stages and needed to grow and flourish.

In reply to a query about marketing of mutual funds, Najam Ali said that the problems were those of lack of education and lack of concept of brand recognition by the general public.

He said that in his opinion, marketing of mutual funds should be done by both commercial banks and distribution branches and disclosed that ABAMCO had plans to set up 49 branches; beginning with a branch each in Karachi and Islamabad.