There have been cases recently where a corporate group owns a mutual fund and the mutual fund, in turn, holds debt of the parent group. Some of these companies have faced some debt issues that have also hit the mutual funds owned by them. The promoter of the ITI Group is also closely linked to the promoters of Sun Pharma Ltd, which recently faced certain accusations from a whistle-blower. So what is the objective of the promoters in launching a mutual fund?
If we look at the mutual fund landscape, there are good promoters and there are a few bad promoters also. Most large mutual funds are run by banks which are leveraged entities. There are very few cases where a strong cash-rich promoter is starting a mutual fund. This is where ITI Mutual Fund promoters stand out compared to leveraged entities. Over the past 25-30 years the promoters have built businesses without leverage and being cash rich.
