Nanavati was ex-Chief Investment Officer for HDFC Standard Life in India.Religare Enterprises has appointed Saurabh Nanavati as the CEO designate of its asset management business. Nanavati, who was ex-Chief Investment Officer for HDFC Standard Life in India, has been involved with Religare for the last one year. Prior to HDFC Standard Life, he had worked for Deutsche Asset Management, both in India and Singapore. Ajay Bagga, the existing CEO of Lotus India AMC, is moving out of the firm post buyout by Religare. Religare last month acquired Lotus AMC (a venture of Temasek-funded Fullerton and London-based Sabre Capital Worldwide) in what was believed to be a bargain deal.Subsequently, Religare and Dutch financial services major Aegon had decided to part ways in their existing asset management joint venture in India, Religare Aegon Mutual Fund. This came within a month after the JV firm received regulatory nod to commence business.Though some reports linked the development to the acquisition of Lotus Mutual Fund, others hinted at the deal where Religare Enterprises acquired London-based brokerage Hichens Harrison as it translated into a conflict of interest between the partners in the European market.Under the restructuring, Lotus Mutual Fund would become Religare's asset management business in India and Aegon would assume control of Religare Aegon Mutual Fund. Religare has received regulatory approvals for divesting its stake in its 50:50 AMC JV with Aegon.The break-up of the asset management JV, however, does not affect the life insurance JV between Religare and Aegon. In this venture, Religare holds 44% stake while Aegon has 26%. Media house Bennett Coleman & Co Ltd (BCCL), through its private treaties wing (which sells ad space for equity) owns the remaining 30% stake in the life insurance venture.
Wednesday, December 3, 2008
"Recession Is The Best Time To Invest" : McNally Capital
McNally is advising a family office to set up a $150M healthcare focussed PE fund in India.
Chicago--based McNally capital is an investment firm that addresses the private equity needs of family offices and high networth individuals (HNIs) with two core businesses: a $75 million US based buyout fund that makes controlled investments in US based firms that have an opportunity to leverage India, and second, managing private equity assets of family offices worth $150 million.
Their family office clients, numbering over 100 and located either in US,India or the UAE, are looking to invest in Indian funds, fund of funds with an India focus and also at making direct investments into companies. It is currently working on a $150 million healthcare focussed private equity fund for India, with an NRI family as the main investor. VC Circle's Shrija Agrawal spoke to John P.Rompon, Managing Partner, McNally Capital, on their India plans. Rompon's association with India goes back to 20 years, when he was the CEO of Brigade Corporation, a General Atlantic Portfolio Company based out of Hyderabad. Excerpts:
How is McNally's strategy in India evolving?
As a buyout fund, we will take control positions in companies that can leverage India either as a "sell to" or "deliver from" destination. We could subsequently look at those firms making acquisitions abroad. We believe that there is a trend of Indian companies making acquisitions in the US. We see an opportunity where our portfolio companies can be acquired by Indian companies. Our experience in India would be helpful.
Secondly, as for our managed account business, our family office clients like to make investments in India, either in the funds which have an India focus, fund of funds with an India focus or directly in Indian companies. At the moment we have 106 families in our system and many of them are interested in investing in India or have already made investments in the country. We have not invested directly in India till now.
What do you think about the India story? How do you see that unfolding?
I am very bullish on India and have been for several years. My bullishness does not come from an interest in labour arbitrage, rather from a first hand observation of the talent and skill level that's available from the work force. India has an advantage over several other developing countries.
Private equity is still at a nascent stage in India. We don't see many controlled transactions. Do u think that India will transition to a mature buyout market?
I think the balance of trade between India and the rest of the world will revert to positive from its current negative, and I believe that liberalisation of the foreign direct investment will encourage control investments. One challenge is that within India, the best companies are family controlled and these families are typically reluctant to give up control. So the first stage in the process may be that domestic or foreign investors are allowed to take economic control of Indian companies but not take governance control. It goes on to say that even if the investors own more than 50% of the shares, they won't necessarily be able to control the board. The second phase would be that would permit domestic or foreign investors to take both economic and governance control.
Any particular deals that you are working on right now in India?
Yes, the areas that interest us are principally in the health care area and in business services. We are currently working with one of our investors who wants to set up a private equity fund focused on health care opportunities in India.
Which one is that?
well I can't identify the investor for you. I would just describe this as an Indian family that's been in the US for the past 20 yrs and is working to establish in India.
And how big would be this healthcare focussed private equity fund?
The fund is targeted to be $150 million.
Talking about current fund raising environment, do you think its easy to raise funds right now?
No, it's not easy to raise funds right now, but it's a great time to invest.
Any value picks that you are seeing in India right now?
The best time to invest historically has been recessionary period and a negative GDP growth. So in the US we have negative GDP growth now, which is an outstanding time to invest. Within India there is no negative GDP growth, and it is expected to grow at 6 to 7%. Since it's a slow and a tedious growth rate (for a growth market like India), it is an attractive opportunity to invest in private equity in India.
I don't pretend to understand the public markets in India or elsewhere but within private equity I do think this is an attractive time to invest and the sectors that are particularly attractive have to do with staple sectors such as power, food, infrastructure and other basic commodities or companies that serve those sectors.
I also believe that, over the last 20 years, private equity has consistently delivered the highest risk adjustability returns than any other asset class. Secondly, more and more institutional investors are adopting an endowment style of private equity that involves investing in an asset class year over year rather than trying to time the market. I believe that all investors – both institutional and individual have come to understand the nature of private equity investing with regard to the cash flow and other elements of it, and their expectations have matured.
Which sub-sector within healthcare are you most upbeat about?
Historically, spending on health care increases faster than the rate at which GDP grows and this is one reason why we have been taking a hard look at the healthcare sector in India. We expect spending on healthcare to grow even faster than the rate of growth of GDP. We and our investors feel that the best opportunities that are available in service delivery and in particular ambulatory care. We believe that those investments are for the greatest returns and offer the greatest opportunity to positively impact the healthcare within India.
Would you be looking at any PIPE transactions?
Absolutely not.
Would you be also looking at distressed investing now?
we aren't targeting distressed investing, but we are targeting companies which have reached a point where they can't grow without some assistance.
Chicago--based McNally capital is an investment firm that addresses the private equity needs of family offices and high networth individuals (HNIs) with two core businesses: a $75 million US based buyout fund that makes controlled investments in US based firms that have an opportunity to leverage India, and second, managing private equity assets of family offices worth $150 million.
Their family office clients, numbering over 100 and located either in US,India or the UAE, are looking to invest in Indian funds, fund of funds with an India focus and also at making direct investments into companies. It is currently working on a $150 million healthcare focussed private equity fund for India, with an NRI family as the main investor. VC Circle's Shrija Agrawal spoke to John P.Rompon, Managing Partner, McNally Capital, on their India plans. Rompon's association with India goes back to 20 years, when he was the CEO of Brigade Corporation, a General Atlantic Portfolio Company based out of Hyderabad. Excerpts:
How is McNally's strategy in India evolving?
As a buyout fund, we will take control positions in companies that can leverage India either as a "sell to" or "deliver from" destination. We could subsequently look at those firms making acquisitions abroad. We believe that there is a trend of Indian companies making acquisitions in the US. We see an opportunity where our portfolio companies can be acquired by Indian companies. Our experience in India would be helpful.
Secondly, as for our managed account business, our family office clients like to make investments in India, either in the funds which have an India focus, fund of funds with an India focus or directly in Indian companies. At the moment we have 106 families in our system and many of them are interested in investing in India or have already made investments in the country. We have not invested directly in India till now.
What do you think about the India story? How do you see that unfolding?
I am very bullish on India and have been for several years. My bullishness does not come from an interest in labour arbitrage, rather from a first hand observation of the talent and skill level that's available from the work force. India has an advantage over several other developing countries.
Private equity is still at a nascent stage in India. We don't see many controlled transactions. Do u think that India will transition to a mature buyout market?
I think the balance of trade between India and the rest of the world will revert to positive from its current negative, and I believe that liberalisation of the foreign direct investment will encourage control investments. One challenge is that within India, the best companies are family controlled and these families are typically reluctant to give up control. So the first stage in the process may be that domestic or foreign investors are allowed to take economic control of Indian companies but not take governance control. It goes on to say that even if the investors own more than 50% of the shares, they won't necessarily be able to control the board. The second phase would be that would permit domestic or foreign investors to take both economic and governance control.
Any particular deals that you are working on right now in India?
Yes, the areas that interest us are principally in the health care area and in business services. We are currently working with one of our investors who wants to set up a private equity fund focused on health care opportunities in India.
Which one is that?
well I can't identify the investor for you. I would just describe this as an Indian family that's been in the US for the past 20 yrs and is working to establish in India.
And how big would be this healthcare focussed private equity fund?
The fund is targeted to be $150 million.
Talking about current fund raising environment, do you think its easy to raise funds right now?
No, it's not easy to raise funds right now, but it's a great time to invest.
Any value picks that you are seeing in India right now?
The best time to invest historically has been recessionary period and a negative GDP growth. So in the US we have negative GDP growth now, which is an outstanding time to invest. Within India there is no negative GDP growth, and it is expected to grow at 6 to 7%. Since it's a slow and a tedious growth rate (for a growth market like India), it is an attractive opportunity to invest in private equity in India.
I don't pretend to understand the public markets in India or elsewhere but within private equity I do think this is an attractive time to invest and the sectors that are particularly attractive have to do with staple sectors such as power, food, infrastructure and other basic commodities or companies that serve those sectors.
I also believe that, over the last 20 years, private equity has consistently delivered the highest risk adjustability returns than any other asset class. Secondly, more and more institutional investors are adopting an endowment style of private equity that involves investing in an asset class year over year rather than trying to time the market. I believe that all investors – both institutional and individual have come to understand the nature of private equity investing with regard to the cash flow and other elements of it, and their expectations have matured.
Which sub-sector within healthcare are you most upbeat about?
Historically, spending on health care increases faster than the rate at which GDP grows and this is one reason why we have been taking a hard look at the healthcare sector in India. We expect spending on healthcare to grow even faster than the rate of growth of GDP. We and our investors feel that the best opportunities that are available in service delivery and in particular ambulatory care. We believe that those investments are for the greatest returns and offer the greatest opportunity to positively impact the healthcare within India.
Would you be looking at any PIPE transactions?
Absolutely not.
Would you be also looking at distressed investing now?
we aren't targeting distressed investing, but we are targeting companies which have reached a point where they can't grow without some assistance.
Source:http://www.vccircle.com/500/news/recession-is-the-best-time-to-invest-mcnally-capital
Mutual funds' AUM takes a beating again
ASSETS under management (AUM) of Indian mutual funds continued to shrink in November, extending the downtrend for the third consecutive
month. Total assets at
the close of the month stood at Rs 4,02,029 crore, down 7% from October. In relative terms, this is the second-highest monthly decline, after the 18% drop seen in the month before. Overall, AUMs are down 30% from the start of this calendar.
Barring Tata Asset Management and UTI, all other fund houses have seen their assets decline. The recently-formed Mirae Asset Management has lost more than 69% of its AUM from the beginning of October to end of November. The fund house had lost nearly 57% of its assets in October. However, Arindam Ghosh, CEO of Mirae Asset, said AUM is the average figure for the month and that the fund house has not seen major redemptions in November. In fact, it has seen marginal net inflows in its equity funds.
The other fund houses to have lost heavily last month include Taurus (-34%), Edelweiss (-28%) and ING (-22%) among others.
Tata and UTI have registered a growth of about 3.2% and 0.2% in their AUMs. According to Ved Prakash Chaturvedi, MD, Tata AMC, while the equity schemes have seen marginal inflows, the fixed income funds have seen good inflow of funds.
"As a fund house, we have been investing only in highly rated– AAA– and equivalent papers, and have maintained the disclosure transparency in all our portfolios which has helped gain the investor confidence," he said.
Jaideep Bhattacharya, CMO, UTI Asset Management also confirmed fresh inflows in the fixed income funds, from both retail and corporate investors. "While our equity schemes have also seen inflows, they are not adding to large amounts since most are through the SIP route. We have had nearly 70,000 new SIP accounts in the last 45 days," he said. Its new fund order (NFO), UTI Wealth Builder Series– II, has also collected close to Rs 300 crore. However, the same shall be reflected in the AUM for the month of December 2008, he said.
UTI also has another reason to cheer this time. With an AUM of Rs 38,358 crore, it has regained its position as the third largest fund house displacing ICICI Prudential, whose AUM fell 5.4% to Rs 37,055 crore. Reliance continues to retain its coveted numero uno position, despite a decline of about 4.6% in the AUM. The fund’s average assets currently stand at Rs 67,816 crore.
month. Total assets at
the close of the month stood at Rs 4,02,029 crore, down 7% from October. In relative terms, this is the second-highest monthly decline, after the 18% drop seen in the month before. Overall, AUMs are down 30% from the start of this calendar.
Barring Tata Asset Management and UTI, all other fund houses have seen their assets decline. The recently-formed Mirae Asset Management has lost more than 69% of its AUM from the beginning of October to end of November. The fund house had lost nearly 57% of its assets in October. However, Arindam Ghosh, CEO of Mirae Asset, said AUM is the average figure for the month and that the fund house has not seen major redemptions in November. In fact, it has seen marginal net inflows in its equity funds.
The other fund houses to have lost heavily last month include Taurus (-34%), Edelweiss (-28%) and ING (-22%) among others.
Tata and UTI have registered a growth of about 3.2% and 0.2% in their AUMs. According to Ved Prakash Chaturvedi, MD, Tata AMC, while the equity schemes have seen marginal inflows, the fixed income funds have seen good inflow of funds.
"As a fund house, we have been investing only in highly rated– AAA– and equivalent papers, and have maintained the disclosure transparency in all our portfolios which has helped gain the investor confidence," he said.
Jaideep Bhattacharya, CMO, UTI Asset Management also confirmed fresh inflows in the fixed income funds, from both retail and corporate investors. "While our equity schemes have also seen inflows, they are not adding to large amounts since most are through the SIP route. We have had nearly 70,000 new SIP accounts in the last 45 days," he said. Its new fund order (NFO), UTI Wealth Builder Series– II, has also collected close to Rs 300 crore. However, the same shall be reflected in the AUM for the month of December 2008, he said.
UTI also has another reason to cheer this time. With an AUM of Rs 38,358 crore, it has regained its position as the third largest fund house displacing ICICI Prudential, whose AUM fell 5.4% to Rs 37,055 crore. Reliance continues to retain its coveted numero uno position, despite a decline of about 4.6% in the AUM. The fund’s average assets currently stand at Rs 67,816 crore.
Source: http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/MF_News/Mutual_funds_AUM_takes_a_beating_again/articleshow/3786192.cms
Mutual funds may now have to list close-ended schemes
Capital market regulator Securities and Exchange Board of India (Sebi) is set to revise its rules to make it mandatory for mutual
funds to list close-ended
schemes — both equity and debt — on stock exchanges.
The proposed changes are aimed at protecting asset management companies and unitholders from the risks arising out of abrupt, heavy withdrawals by large institutional investors and to discourage early or premature withdrawals by investors.
Over a month ago, several fund houses came under severe pressure after institutional investors pulled out funds owing to a liquidity squeeze. Later, the Reserve Bank of India opened a window for banks to access funds for lending to mutual funds to help them tide over the situation.
These events prompted Sebi to undertake a review of the structure of MFs, especially debt schemes, taking into account the systemic risks.
A review of rules relating to MFs’ close-ended schemes is under way and the Sebi board may discuss changes in regulations, a source said. Funds may also not be allowed to repurchase units through the buyback facility window.
According to the proposal, there will not be any exit opportunity for investors through the fund.
Instead, they will have to do so through the exchange. Currently, in a close-ended scheme, a fund offers a window for investors to redeem their units periodically. The changes under way will imply that the fund will no longer have to bear the cost associated with huge redemptions.
An investor who wants to exit can do so through the stock exchange — he, therefore, will have to find a buyer. The onus is no longer on the fund house to provide the window and ensure liquidity.
Effectively, this will mean that funds with a fixed tenure will now truly be close-ended schemes, which could be traded like exchange-traded funds.
This will also address the issue of asset-liability mismatch at some fund houses to a certain extent, besides helping to do away with the exit load that is imposed when unitholders move out.
Globally, close-ended shemes are listed on exchanges, except for those which are close-ended for perpetuity, in which case the fund house provides the interval structure.
Since the trading of units takes place only on the exchange, net asset values (NAVs) will not be impacted. Investors who stay on in the scheme are protected to a great extent and the fund manager is also not forced to sell securities before maturity at a huge discount, as is the case now when large investors in close ended schemes pull out.
However, officials in the mutual fund industry said there will be a listing cost involved. These will be part of the expenses for the fund, but will be lower than the exit load.
Apart from the changes to the rules on mutual funds, the Sebi board, which is meeting on Thursday, is also slated to discuss the future of regional stock exchanges (RSEs). The issue of handling the valuation and distribution of RSEs’ assets may be taken up.
funds to list close-ended
schemes — both equity and debt — on stock exchanges.
The proposed changes are aimed at protecting asset management companies and unitholders from the risks arising out of abrupt, heavy withdrawals by large institutional investors and to discourage early or premature withdrawals by investors.
Over a month ago, several fund houses came under severe pressure after institutional investors pulled out funds owing to a liquidity squeeze. Later, the Reserve Bank of India opened a window for banks to access funds for lending to mutual funds to help them tide over the situation.
These events prompted Sebi to undertake a review of the structure of MFs, especially debt schemes, taking into account the systemic risks.
A review of rules relating to MFs’ close-ended schemes is under way and the Sebi board may discuss changes in regulations, a source said. Funds may also not be allowed to repurchase units through the buyback facility window.
According to the proposal, there will not be any exit opportunity for investors through the fund.
Instead, they will have to do so through the exchange. Currently, in a close-ended scheme, a fund offers a window for investors to redeem their units periodically. The changes under way will imply that the fund will no longer have to bear the cost associated with huge redemptions.
An investor who wants to exit can do so through the stock exchange — he, therefore, will have to find a buyer. The onus is no longer on the fund house to provide the window and ensure liquidity.
Effectively, this will mean that funds with a fixed tenure will now truly be close-ended schemes, which could be traded like exchange-traded funds.
This will also address the issue of asset-liability mismatch at some fund houses to a certain extent, besides helping to do away with the exit load that is imposed when unitholders move out.
Globally, close-ended shemes are listed on exchanges, except for those which are close-ended for perpetuity, in which case the fund house provides the interval structure.
Since the trading of units takes place only on the exchange, net asset values (NAVs) will not be impacted. Investors who stay on in the scheme are protected to a great extent and the fund manager is also not forced to sell securities before maturity at a huge discount, as is the case now when large investors in close ended schemes pull out.
However, officials in the mutual fund industry said there will be a listing cost involved. These will be part of the expenses for the fund, but will be lower than the exit load.
Apart from the changes to the rules on mutual funds, the Sebi board, which is meeting on Thursday, is also slated to discuss the future of regional stock exchanges (RSEs). The issue of handling the valuation and distribution of RSEs’ assets may be taken up.
Source: http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/MF_News/Mutual_funds_may_now_have_to_list_close-ended_schemes/articleshow/3786296.cms
SBI Mutual Fund mobilises Rs 1,677 cr in NFO period
The SBI Mutual Fund has mobilised Rs 1,677 crore under SBI Debt Fund
Series-90 Day-32 plan that was closed on November 25, 2008.
The scheme received good response from both retail and institutional investors with 2,300 applications being received during the New Fund Offer period, the company said in a press statement today.
SBI Mutual Fund has an investor base of over 55 lakh and a large network across the country.
Series-90 Day-32 plan that was closed on November 25, 2008.
The scheme received good response from both retail and institutional investors with 2,300 applications being received during the New Fund Offer period, the company said in a press statement today.
SBI Mutual Fund has an investor base of over 55 lakh and a large network across the country.
Source:http://economictimes.indiatimes.com/News_by_Industry/SBI_mobilises_Rs_1677_cr_in_NFO/articleshow/3785239.cms
Mutual funds’ asset base drops 7% in Nov
The mutual fund industry’s assets under management (AUM) fell seven per cent in November. The fall was led by a substantial decline in the asset bases of mid-sized mutual fund houses.While the top fund houses too recorded a fall in AUM, UTI Mutual Fund, the fourth largest fund house by asset base, reported a marginal increase in its asset base.
The industry shed Rs 29,831 crore worth of assets in the past month. Their AUM now stands at Rs 4,02,029 crore against Rs 4,31,860 crore in October.
Of the 35 mutual fund houses which have declared their assets under management data, only Tata Mutual Fund and UTI Mutual Fund reported increase in their asset base.
The asset base of Reliance Mutual Fund, the top fund house by asset size, dropped 4.2 per cent.
HDFC Mutual Fund, second largest fund house, recorded a dip of 2.67 per cent in its AUM.
ICICI Prudential’s asset base fell by 5.42 per cent, while UTI Mutual Fund’s AUM rose 0.19 per cent.
The benchmark Sensex had fallen by more than seven per cent in November, while the broader Nifty was down by 4.5 per cent. The depreciation in the mutual funds’ asset base was more in equity funds compared with debt schemes, said Mr Ramkumar K, Head-Fixed Income, Sundaram BNP Paribas Asset Management.
The fall in the asset base is partly due to the mark-to-market loss in November and partly due to redemptions, said a fund manager.
With interest rates softening, the debt funds are recording an appreciation in value, which adds to the asset base, said an analyst. But the proportion of interest rate sensitive funds (bond and gilt funds) to the AUM of the industry as a whole is not significant so their contribution through value appreciation will also not be big, said Mr Ramkumar.
Fund managers said that while there is not much redemption pressure, the inflows are also minimal.
Very few people are now investing directly in the stock market and are showing a preference for the SIP route, said Mr K. Venkitesh, National Head of Distribution, Geojit Financial Services.
While the overall mutual fund collections have drastically come down in the past few months, SIPs are still attracting considerable interest.
One-time lump sum investments have fallen drastically.
The AUM for equity category in October was Rs 1,09,658 crore, while for debt it was Rs 3,22,202 crore.
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