Religare Global Asset Management (RGAM), the global asset management division of the diversified financial services company Religare Enterprises, is seeding close to half a dozen funds as part of its strategy to create a multi-boutique alternative asset management platform, a senior executive of the company told VCCircle in an exclusive interview.
RGAM has $15 billion in assets under management.
“Each one of them will have its distinguished brand and its own managing partner. We will incubate them on the same governance framework and make sure that they offer different strategies, with marquee product lines,” Shachindra Nath, Group CEO, Religare Enterprises, said.
As part of this strategy, RGAM is seeding five new funds - ValueQuest Capital, Religare Credit Advisors, Religare Comtrade Ltd, Healthcare Rental Yield fund and an Agro Fund.
ValueQuest Capital, led by Paresh Thakker and well known value investor Sanjay Bakshi, targets to focus on Indian public equity markets space by investing in undervalued businesses possessing "strong and sustainable competitive advantage".
The fund, which will be structured as a company based in Mauritius, is looking to float an offshore fund by the end of first quarter of 2014 and is in talks with domestic and foreign investors for fund raising, the Religare executive said.
"Paresh, who used to run the global asset management portfolio, has been an investor for his life. Whenever somebody shows desire to build his own business, we help him do that," Nath said.
Thakker, who was earlier managing the limited partner assets for Religare, will now don the role of a GP. Thakker has partnered with Bakshi, a value investing guru and a professor of finance at Management Development Institute, Gurgaon and IIM Lucknow. Bakshi was also running his own investment firm Tactica Capital Management till 2012.
ValueQuest will invest in listed companies, but will build a very concentrated portfolio. "They have been going around the globe at this point in time to see what the market appetite is. It would be an open-ended fund so they can start receiving contribution, and they are getting very good traction," said Nath.
Debt funds
Additionally, RGAM is working to create an India-focused debt investment fund under Religare Credit Advisors which will offer structured lending to mid-market corporates. The investment strategy of the fund would be to invest in structured debt or debt instruments which will be backed by collaterals in middle market companies.
In the initial phase, the fund would acquire the existing portfolio of assets of Religare Finvest Ltd, which currently amounts to about Rs 600 crore and at the time of final transfer could go up to Rs 1,000 crore. The fund will be led by Religare insider Kanchan Jain, supported with five other team members. Jain was earlier president and chief risk officer of Religare Finvest Ltd and responsible for risk across all businesses for its Rs 14,000 crore balance sheet.
RGAM's debt fund comes at a time when there are a host of other funds trying to raise debt strategies. KKR, the NYSE-listed buyout major, which set up India operations in 2009, lends through a non-banking finance company. It also received SEBI’s approval under new AIF norms for a fund, KKR India Alternative Credit Opportunities Fund 1.
Several fund houses have been gearing up for mezzanine investments in the recent past. While homegrown CX Partners is planning to raise a fund, Standard Chartered Private Equity started such investments last year.
"Debt requires a complete different mindset from private equity," Nath reasoned.
Nath said Religare will transfer Rs 600 crore worth "best of the loan portfolio" from Religare Finvest to this new fund, and additionally will invest Rs 100-150 crore, so that it has a good base to start with.
Commodity funds
Besides, RGAM is working on setting up equity and commodity arbitrage fund under Religare Comtrade with a target corpus of Rs 750 crore. It will focus on equities, commodities derivatives, including agro commodities, bullion and currency. The company also plans to raise money from third parties by issuing NCDs.
“We have always been running an arbitrage portfolio. That portfolio and the team have historically in last five years generated 17% plus IRR. They do arbitrage between cash, future, agro commodities in future markets and multiple strategies. We are trying to structure either as a separate entity or as a fund,” Nath said.
RGAM is in talks to engage a law firm to structure the business and appoint a rating agency to rate the proposed entity.
Healthcare, agro funds
Besides these funds, RGAM is working to launch an healthcare infrastructure yield fund focusing on periodic returns by investing in income generating healthcare assets operated by a quality operator. The fund will be led by Sachin Batra, who is currently managing director, Religare Capital Markets Ltd, and supported by Vikram Garg and Dillip Agarwal. The fund is targeting a corpus of Rs 750 crore, with a green shoe option of another Rs 250 crore.
RGAM is also working to launch an agro fund targeting the agri and food space. The fund is still in its initial stages and RGAM is deciding the contours of the same. "India does not have multiplicity of specialised funds. We are trying to create a specialised fund - because there is an opportunity to create multiple pools of capital,” Nath said.
RGAM currently manages two India funds, healthcare fund Quadria Capital, and India Build out Fund II (earlier, Milestone Religare Investment Advisors) under Quadria. RGAM's global assets include fund of funds Landmark Partners and Northgate Capital. Currently, RGAM contributes around 10 per cent to Religare Enterprises’ total revenue.
(Edited by Joby Puthuparampil Johnson)