Mumbai: Renaissance Investment Managers Pvt. Ltd is close to launching the ₹ 1,000-crore India Next Fund, its first equities-focused alternative investment fund (AIF), the company founder said. The new fund will invest in companies that benefit from India’s economic recovery and the reforms initiated by the government, said Renaissance founder Pankaj Murarka.
Renaissance was founded by Murarka, a former chief investment officer at Axis Mutual Fund, in 2017. Murarka has previously worked with Merrill Lynch, Rare Enterprises, Motilal Oswal Securities and UTI Mutual Fund. His firm currently runs two funds under its portfolio management services (PMS) business and is now raising its first AIF.
“The investment thesis is that the fund will play on India’s economic recovery. Indian economy has been in an industrial recession for the last four years. India’s IIP (index of industrial production) growth over last four years has been 3%, against a long-term average of 6% and versus a peak IIP growth of 15% in 2007," said Murarka.
The good thing is all that pain is behind us and the economy is on a path of recovery, he said. India Next Fund, a multi-cap fund, will look to invest in sectors relating to India’s domestic economy such as engineering, capital goods and financials. “We are bullish on domestic economy. Industrial recovery will start now. Things such as bad assets and banking issues were holding growth back. Now, those are getting resolved through the NCLT (National Company Law Tribunal) route and we are already seeing a recovery in the investment cycle. Sectors that are looking exciting include engineering and capital goods, financials, auto, transportation and logistics, hotels, media and consumer discretionary," said Murarka.
Within these sectors, the fund will look to back companies with leadership positions, he added.
“We will invest in companies which are leaders in their respective sectors. Whenever you see economic recovery, the leader is the guy who is the biggest beneficiary of the recovery," said Murarka.
Renaissance is looking to tap high net-worth individuals and family offices for its fund-raise. According to Murarka, liquidity is not a constraint in today’s market for alternative investment products. “We see a significant opportunity in the alternate platform of asset management, which comprises of PMS and AIFs. This space is where mutual fund industry was in 2000, when the total AUM of all equity MFs used to be around ₹ 70,000-80,000 crore. But in the last two decades the industry has grown very significantly. The alternate space is in that similar place today. We believe that in the next 10-15 years, the alternates space will see tremendous growth," said Murarka.
The Category 3 AIF space has seen strong traction in the last couple of years, with fund managers launching unique strategies and investors looking to diversify their equities portfolio. According to data from Securities and Exchange Board of India (Sebi), Category 3 AIFs raised a total of ₹ 14,333 crore in the calendar year 2017, compared to a total of ₹ 7,691.9 crore in the previous four years.
In May, Mint reported that Old Bridge Capital Management has raised around ₹ 1,200 crore for its AIF that will invest in publicly listed companies.
In April, Mint reported that Avendus Enhanced Return Fund, the second hedge fund launched by Avendus Capital, crossed ₹ 1,000 crore in assets under management in the four months since its launch. Avendus’ first hedge fund had raised ₹ 3,300 crore in 2017.