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Reliance Nippon Life Asset Management’s head of portfolio management services and alternative assets Shahzad Madon.
Reliance Nippon Life Asset Management’s head of portfolio management services and alternative assets Shahzad Madon.

Reliance AIF launches 2 equity-focused funds

Reliance AIF to raise Rs1,000 crore across both funds

Mumbai: Reliance AIF Asset Management Co. Ltd has launched two new equity-focused alternative investment funds (AIFs) across which it plans to raise Rs1,000 crore, a company executive said.

Reliance AIF is a unit of Reliance Nippon Life Asset Management Ltd.

The two new funds—Reliance Equity Opportunities AIF-Scheme 2 and Reliance Equity Opportunities AIF-Scheme 3—will invest in opportunities in the growing financial services sector of the country and opportunities generated by the large and working age millennial population in the country, respectively.

The two new funds follow the first Rs500 crore equity-focused fund raised last year by Reliance AIF.

“We achieved strong closing in ‘Scheme 1’ and based on the strong response we have received to our first scheme, we have launched the two new offerings. When we do a new theme, in our minds what is important is that it should be a secular story, a story that you have seen play out over the last, say, 10 years and which you believe will play out over the next very many years," said Shahzad Madon, head of portfolio management services and alternative assets at Reliance Nippon Life Asset Management Ltd.

The first theme that the firm tapped was about the move from unorganized to organized sector, a move which has happened over the last many years and will continue to happen over the next many years, he said. One of themes that Reliance AIF wants to focus on this time is the opportunity created by a large, working age, earning millennial population through its Reliance Equity Opportunities AIF - Scheme 3 fund.

“Twenty per cent of world’s millennials live in India and they form 46% of India’s workforce. So it’s a key demographic segment in our population as well as our labour force. And it is a large demographic segment that makes both decisions on consumption purchase and investments," said Madon.

The fund will target three key opportunity sets.

“One of themes is aspirational consumption across automobiles, housing, education, lifestyle, media. Second one is what we call financing, investing and protecting. Retail financing has boomed in the country and it is going to grow further. So are life insurance, AMCs and wealth management. Third is the fulfilment ecosystem. People want things ‘here and now’ and so investing in businesses that make that possible, which is digital backbone infrastructure, fintech, logistics and transportation," said Madon.

The millennial-focused fund is a multicap fund, closed ended with a duration of 3.5 years. Reliance AIF is targeting to raise Rs500 crore for the fund, with a green shoe option of another Rs500 crore.

“We have already started marketing this fund. We intend to do our first close by end of this month," said Madon.

The other fund launched by Reliance AIF—Reliance Equity Opportunities AIF-Scheme 2—will look to invest in opportunities in the financial services space.

“India is the best performing market over the last 20 years. Since 2004, the financial services benchmark has started. Since then the financial services benchmark has delivered 6% per annum outperformance relative to Nifty, which means that since 2004 it is 10.3x up versus 5.6x up for Nifty. Which means a very wonderful performing index has been outperformed by the financial services index," said Madon.

The firm intends to tap four major trends in the financial services space through this fund.

“One is democratization of banking services due to Aadhaar and the Pradhan Mantri Jan-Dhan Yojana. This we believe will drive huge growth in retail and MSME credit. Second is creeping privatization, where we believe that private sector banks will continue to take more market share. Third is financial savings boom that will drive AMCs, insurance and wealth management businesses and lastly, housing for all, which will create huge demand for housing loans," said Madon.

Reliance AIF currently has assets under management of a little under Rs2,500 crore.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

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