State Bank of India is likely to sell about 49 per cent stake in its mutual fund arm to a strategic partner to increase its capital base and boost its business.

"We are looking for a strategic partner in our mutual fund business," SBI chairman A K Purwar told PTI, but declined to divulge details.

Indications are that SBI would like to sell 49 per cent stake to the strategic partner who could be a foreign player.

The move comes after SBI, along with Life Insurance Corporation, Punjab National Bank and Bank of Baroda, took over the charge of net asset value-based schemes of erstwhile Unit Trust of India under the banner UTI Mutual Fund last fiscal.

SBI Mutual Fund, established in 1955, had assets worth Rs 3,312 crore (Rs 33.12 billion) and reported a net profit of Rs 6.21 crore (Rs 62.1 million) during 2002-03.

The fund, which manages over 21 schemes, has an investor base of over 800,000 and it was the first bank-sponsored entity to launch an offshore fund, India Magnum Fund, with a corpus of Rs 225 crore (Rs 2.25 billion).

The fund, with a networth of Rs 60.38 crore (Rs 603.8 million) in 2002-03, is one among the seven bank-sponsored mutual funds in India.

SBI Mutual Fund is planning to launch two funds -- Magnum Income Plus and Magnum Institutional Fund -- this year.

The fund has set a gross moblisation target of Rs 8,600 crore (Rs 86 billion) in 2003-04.

SBI's move to sell a part of equity comes in the wake of Templeton buying out Pioneer, the US-based Principal buying out IDBI's stake in IDBI-Principal Asset Management Company, and HDFC taking over the mutual funds of Zurich.