INVESTMENT AVENUES IN CURRENT MARKET SCENARIO
Insights: PMS and Alternative Investment Funds in India Speaker : AMIT SAXENA Date : 18th Dec 2019
INVESTMENT AVENUES IN CURRENT MARKET SCENARIO Insights: PMS and - - PowerPoint PPT Presentation
INVESTMENT AVENUES IN CURRENT MARKET SCENARIO Insights: PMS and Alternative Investment Funds in India Speaker : AMIT SAXENA Date : 18 th Dec 2019 India Poised for growth India is the 5 th largest economy in the world at around $2.6tn and
Insights: PMS and Alternative Investment Funds in India Speaker : AMIT SAXENA Date : 18th Dec 2019
years – first trillion in 58 yrs, second trillion in 7 years and third trillion expected to be in 6 years
around $1.47tn in next 5-7yrs (AMFI)
average of >60% and USA ~114% (Bloomberg)
India – Poised for growth
Growing number of public companies in India
Source: SEBI, IBEF data
Highest number of listed companies - India
Source: SEBI, IBEF data, World bank, Globaleconomy
Fastest growing HNI population – India - $8.3tn
Source: SEBI, IBEF data
42% of companies with market cap between Rs. 100 to 20,000 crores have no broker covering the company 21% of companies have only 1 broker covering the company Mid & small cap space is largely undiscovered by the institutional investors Early movers are likely to have an advantage
Yet India’s market remains under researched and under penetrated
Due to the diversity of listed companies along with the large number of listed stocks and the opportunity in mid market investing, it is important to participate in India opportunity via a
they would be better equipped to capitalize due to their local expertise and on the ground experience.
Source: Bloomberg Data Jan 2018
Mutual Funds in India
to beat index in traditional fund vehicles
managers would set-up niche boutique shops (become entrepreneurs in search of alpha)
New normal for AMC’s - India
Managed Accounts
Advantage PMS
How to select PMS strategy for your client
How it works
correctly
How it works - taxation
Key players - PMS
liability partnership or a body corporate which
accordance with a defined investment policy for the benefit of its investors
Board of India (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities And does not include:
AIFs in India
Gr Growt wth h story
AIF F Indus ustry try
Key Facts ts:
Venture Capital firms, Hedge Funds, Corporates, Boutique Investment Funds, Individuals etc.
*Number of registered AIF trusts, actual number of Schemes is much higher. Source: SEBI
18 290,340 144,480 119,758 10,000 60,000 110,000 160,000 210,000 260,000 310,000 AIF Commitments Raised (INR Cr) Funds Raised (INR cr) Investments (INR Cr)
Indus ustry ry Composi sitio ion
Types es Descript ption
Funds ds Raised ed Categor gory I
Startup or early stage ventures, Social ventures, SME, Infrastructure Other sectors considered as socially desirable
10% Rs 14,636 Crs Categor gory II
AIFs which do not fall in either category I or category III Pre IPO, Distress Debt, Real Estate (Debt / Mezz/ Equity), Credit (Sector Agnostic), Private Equity / Start Up Equity
62% 62% Rs 89,998 Crs Categor gory III
Employs diverse or complex trading strategies Absolute Return / Long Short Funds, Long Only / Thematic Equity, Commodity
28% 28% Rs 39,846 Crs Total Rs Rs 1,44, 4,480 480 Crs
19 19
39846 46 500 10500 20500 30500 40500 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
CAT I, 14,636 , 10% CAT II, 89,998 , 62% CAT III, 39,846 , 28%
Jun-19
CAT I CAT II CAT III
The life cycle of an AIF
CAT 3 funds are usual ally shorte
r in the range ge of 3.5-5. 5.5yrs 5yrs
Source: Shardul Amarchand Mangaldas and Co.
Advantage AIF
How to select AIF strategy for your client
How it works
How it works - taxation
Fund Management Vehicles
Parameters Mutual Fund PMS AIF Investor Type Retail and High Networth Individuals (HNIs) HNIs HNIs and Ultra HNIs Access type Online and Offline Offline Offline (Private placement only) Liquidity Open and Close ended funds Open ended with exit charges on early redemption Close ended for CAT 1 and 2 and Open ended/Close ended depending on strategy Minimum Investment (INR) INR 500/5000 INR 2.5 million (INR 25 lacs) INR 100 million (INR 1 crore) Draw down option Not Available Not Available Available Nature of investment SIP or One time One time/Top-up One time or Draw down sub to min 1 crore commitment except Employees of the fund Annual Expense One time setup fees- Nil Mgmt Fees - 2.0%-2.5% Fixed fees Profit Sharing - NA One time setup fees- Nil Mgmt Fees - 2%- 2.5% Fixed or ~1.5% Fixed fees with profit sharing (Carry) One time setup fees- 1-2% Mgmt Fees - 1.5%-2.5% Fixed or 1- 2% Fixed fees with profit sharing (Carry) Customization Not Available Option available to each investor Not Available
Source : Abakkus Estimates/Mint
Fund Management Vehicles
Parameters Mutual Fund PMS AIF Transparency High Low Medium to High Maximum No of fund investors No Limit No Limit Each scheme limit of 1000 investors (except VC funds) Managers Contribution/Skin in the Game 1% of corpus or INR 5 million which ever is lower No Managers continuing interest in the Category I & II AIF- not less than 2.5% or INR 50 million whichever is lower, Category III- 5% or INR 100 million whichever is lower. Minimum Networth requirement INR 500 million (INR 50 crore) INR 20 million (INR 2 crore) No requirement except manager's contribution Pooling or Segregation of funds/securities Pooling of Funds/Assets Segregation of each client’s holdings Pooling of Funds/Assets Taxation Pass through Taxation i.e. Tax in the hand of investor depending on holding period Pass through Taxation i.e. Tax in the hand of investor depending on holding period Pass through Taxation for CAT 1 and 2 and No Pass-through for CAT 3 Funds i.e. Tax in the hand of fund
Source : Abakkus Estimates/Mint
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Strictly Confidential. For Private Circulation Only, not for Public Distribution
0% 94% 23% 41% 37% 49% 47% 45% 39% 38% 38% 36% 34% 32% 27% 23% 29% 27% 24% 23% 20% 18% 17% 16% 15% 14% 12% 12% 64% 50% 55% 43% 45% 47% 49% 50% 53% 56% 53% 53% 62% 65% 58% 58% 61% 60% 61% 62% 64% 63% 67% 69% 73% 72% 6% 12% 9% 8% 7% 8% 9% 12% 11% 8% 9% 13% 15% 11% 12% 12% 14% 14% 16% 20% 20% 19% 21% 19% 17% 15% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Share of Comittment Raised by AIF's
Cat 1 Cat 2 Cat 3
0% 100% 4% 46% 35% 23% 20% 8% 9% 11% 20% 24% 23% 22% 18% 17% 17% 17% 19% 17% 13% 12% 13% 11% 10% 11% 10% 10% 0% 0% 85% 40% 51% 57% 56% 69% 63% 60% 63% 61% 56% 52% 64% 64% 60% 60% 60% 57% 60% 57% 59% 58% 60% 59% 62% 62% 0% 0% 11% 15% 14% 19% 24% 23% 28% 30% 18% 15% 21% 25% 18% 19% 23% 23% 21% 26% 26% 30% 28% 31% 30% 30% 27% 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Share of Funds Raised by AIF's
Cat 1 Cat 2 Cat 3
0% 0% 1% 1% 18% 11% 7% 6% 6% 6% 13% 21% 19% 19% 16% 15% 14% 14% 17% 16% 15% 12% 13% 12% 11% 11% 10% 10% 0% 0% 91% 71% 67% 64% 74% 72% 66% 63% 66% 62% 61% 54% 63% 67% 62% 60% 60% 56% 55% 51% 55% 56% 57% 59% 62% 62% 0% 0% 8% 28% 15% 25% 19% 22% 28% 31% 21% 18% 20% 27% 21% 18% 24% 26% 23% 27% 30% 37% 31% 32% 32% 30% 28% 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Share of Investments done by AIF's
Cat 1 Cat 2 Cat 3
Growth of Alternate Investments - India
Source: SEBI, CAIA and author estimates
Key players - AIF
Cat I Cat II Cat III VC Infra
BarclayHedge Hedge Fund Industry AUM ($ Billions)- $4.7tn expected by 2023
$- $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 $3,000.00
Hedge Fund Industry AUM ($ Billions)
Source: BarclayHedge
Gun shots, gun powder & capacity
Source: SEBI, CAIA and author estimates
Opportunities on all sides - Parties Involved in an AIF
Source: Shardul Amarchand Mangaldas and Co
Talent pool estimates – AIF industry
No of Funds INR Crores USD Bn INR Crores USD mn No of AIF Fund Licenses - India (June 2018)* 435 74,893 10.4 172 23.9 No of AIF Fund Licenses - India (Feb 2019)* 519 No of Estimated Schemes of Above funds*** 1038 Average Total Employee Count per fund*** 7 Approx Total AIF Job Market - India 3633 Top 20 Distributors - RM/PBG - Leage Table** 2400 Fund Accounting (Per fund 2 people)*** 1038 Registrar and Transfer Agent (Top3 R&T)*** 250 Lawyers/Custodian/Trustee*** 280 Total Estimated Industry Size - Domestic Funds 7601 No of FPI Registered India (Feb 2019)* 9399 30,90,508 429.2 329 45.7 Foreign Venture Capital Investment (Feb 2019)* 247 36740 5.1 149 20.7 Average Total Employee Count per fund*** 2 Average People Estimated - Offshore funds 19292 Total AIF Employee Pool - Estimate*** 26893 32,02,141 445 650 90
*Source - NSDL/SEBI Data as on Feb 18, 2019 **Asia Private Banker League Table 2017 Estimated ***Abakkus/Author Estimates
Invested Amount Average per fund
Global head count estimates - AIMA
Source: GPP/AIMA
History of Alternate Investments in India
Source: Shardul Amarchand Mangaldas and Co
Global Buzz - Alternatives
Source : CAIA/World Economic Forum/Preqin
Global Buzz – Investor Allocations
Source : CAIA/World Economic Forum/Preqin
tions with respect to to this Present ntati tion:
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licita tati tion of
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ll any any securi uriti ties or
unds or
to ent nter int nto any any cont ntri ributi ution agre reement
Before re any nyone ne consid nsiders rs an an inv nvestm tment nt, it it is is importa tant nt to to re readth thro roug ugh and nd und unders rsta tand nd the the cont ntent nts of
the Pri Private te Plac lacement nt Memora randu ndum (PPM PM). Ab Abakkus As Asset Mana nager LL LLP (“AAM”) is is the the In Investm tment nt Mana nager of
he Ab Abakkus us Gro rowth wth Fund
AAM is is dul uly autho uthori rized to to launch launch and nd manage schemes hemes of
us AIF AIF und under the the SE SEBI BI (Alte Altern rnate te In Investm tment nt Funds Funds) Regul ulati tions, ns, 201 2012, and nd any any amendm ndment nts th there reto to fro rom ti time to to ti time and and rules, guideli lines nes, circul ulars rs issued under the the Securiti ties Excha hange Board rd of
1992.
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uture ure expecta tati tions ns and nd oth ther forwa rward rd-lo looking ng statement tements th that are re based on
ur curr urrent views ws and and assumpti umptions ns and nd inv nvolve lve known wn and and unk unkno nown ri risks and and unc uncert rtaint nties th that coul uld cause actua tual re resul ults ts, perf rform rmance or
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lete, te, and and it it shoul uld no not be be re reli lied up upon as as suc
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hile le we we end ndeavour ur to to up update te on
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nding ng on
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In making ng an an Investm tment nt decision, Investo tor must rely on
tion of
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