AIG fund arm eyes 40 pct growth in India in 2008

NEW DELHI, April 10 (Reuters) - The fund arm of American International Group Inc (AIG.N) aims to outpace others as it grows in India despite market uncertainty, and is bullish on the infrastructure sector, a senior official said on Thursday.

India's fund industry, which is led by a unit of Reliance Capital (RLCP.BO), saw assets rise 71.1 percent in the year to December 2007 to 5.5 trillion rupees ($138 billion), riding on a 47 percent rise in the benchmark share index .BSESN.

It was the sixth straight year of growth for the stock markets, which have drawn foreign operators including JPMorgan (JPM.N) and South Korea's Mirae Asset Management. Morgan Stanley launched its second fund in February after a gap of 14 years.

"I think the Indian mutual fund industry should grow 30-40 percent this (calendar) year. We are hoping to grow more than that," Ravi Mehrotra, who heads AIG's Asia asset management companies out of Hong Kong, told Reuters.

He was in New Delhi to roll out a fund that will invest in gold mining and marketing.

AIG's fund arm, which manages about $11 billion across Asia, launched its first fund in India in May last year.

"We have not even finished a year here and now we manage about 34-35 billion rupees," Mehrotra said, adding the firm had added some assets after data showed it had 31.49 billion rupees at the end of March.

Mutual funds in India have been hit hard this year after a nearly 23 percent fall in the main index amid a global credit crunch and fears of a U.S. slowdown, while slowing economic growth and monetary tightening have also weighed.

India's actively managed diversified equity funds lost more than a fourth of their net value in three months ended March to register the worst quarterly fall ever, data from global fund tracker Lipper showed.

Mehrotra said March quarter corporate results would be an important factor to watch out for, while a downward revision in GDP and monetary tightening would weigh on the markets in the shorter term. He was bullish in the longer run.

"There are a lot of uncertainties right now ... the next six months are going to be interesting and important.

"(But) long term fundamentals are clearly intact. We don't see any issue in corporate India," he said, adding that whether the market had bottomed out or not would depend on factors like global markets and foreign fund inflows.

Mehrotra said infrastructure continues to be a sector with a lot of potential, even as there are concerns that project delays amid tight credit would take the sheen off the sector.

"That is one of the risks already factored in to the stock prices and in the shorter term those things going to have an impact," he said.

"If I look at it on a 3-5 year basis, the fact that we need to put so much infrastructure on the ground ... you name it and we need it." (Editing by Mark Williams)