Ashutosh Maheshvari is looking to raise $300 million for his new venture, Catalyst High Yield Fund
Mumbai: Ashutosh Maheshvari, chief executive of Motilal Oswal Group’s investment banking business, has quit the firm to launch a structured debt fund, after 10 years with the firm.
Maheshvari had joined the investment banking practice of Motilal Oswal in 2006. He was previously an executive director at Rabo India Finance Pvt. Ltd, a non-banking financial company that is part of Rabobank Group.
Maheshvari along with three other founding partners, is looking to raise around $300 million for his new venture called Catalyst High Yield Fund.
“The fund’s objective is to generate income streams by investing in debt instruments in Indian corporates and share upside through increase in profit or equity value of investee companies," Maheshvari said in an email response to queries seeking comment on the venture.
Other founding partners of Catalyst include Siddharth Bhargava, Amit Khosla and Suraj Warrier. Siddharth Bhargava has 15 years of experience in credit trading across Asia and has previously worked with Goldman Sachs SA and Merrill Lynch and Co. Amit Khosla was associated with private equity fund Asiabridge Capital for the past nine years. Suraj Warrier has worked in structured finance across various firms such as CRISIL, Rabo India and Motilal Oswal.
Catalyst has already applied to Securities and Exchange Board of India (Sebi) for registration as an alternative investment fund (AIF), said Maheshvari. It will raise funds from domestic and overseas investors.
The SEBI (Alternative investment funds) Regulations introduced in 2012 replaced the erstwhile SEBI (Venture Capital Fund) Regulations, 1996. The regulations cover various alternative assets like private equity, venture capital, and infrastructure, debt and hedge funds.
Domestic fund raising through AIFs has seen a strong push in the last 12 months, after the government accorded tax pass-through status to all categories of AIFs, except for hedge funds that come under category III AIFs, and with the removal of foreign investment promotion board approval for foreign investors looking to invest in AIFs.
Data from Sebi shows that in the period between 1 April 2015 and 31 March 2016, funds registered as AIFs have raised ₹ 13,117 crore from investors (approximately $2 billion).
In the last 1-2 years, interest in AIFs has improved significantly, said Sambhav Ranka, partner at law firm IC Legal.
“Domestic LPs, whether institutional investors, family offices or HNIs (high net-worth individuals) rather than investing in their own capacity, doing their own diligence, are today more willing to invest in AIFs managed by experienced managers, with performance track records," said Ranka. Additionally, Ranka said, the AIF trust structure has tax pass-through, which gives a lot of clarity to investors from a tax perspective
According to Maheshvari, Catalyst is looking to tap the gap in industrial sector funding, with both public markets and private equity funds becoming wary of the sector of late.
“There is a receding interest of public markets and PE funds to invest in the industrial sector. At same time, banks have limitations in customizing financial solutions," he said.
The fund is targeting to provide structured financing solution to aid companies in industrial sector to grow their business or address any specific situation, said Maheshvari. “At the same time, it provides alternative high fixed income generating investment avenue to investors who have as of now been investing primarily in real estate," he added.
The areas of focus for Catalyst will be pharmaceuticals, automobiles, building material and food processing. Catalyst will look at investments between $20 million and $50 million.
Maheshvari will soon be competing with several entrepreneurial fund managers.
Heramb R. Hajarnavis has quit as head of the PE practice at KKR & Co. Lp in India to set up his own private equity firm.
Sunil Theckath Vasudevan, partner at home-grown private equity firm India Value Fund Advisors Pvt. Ltd, has quit to launch his own fund, targeting a corpus of $150-200 million. Siddharth Parekh, the younger son of Deepak Parekh, chairman of Housing Development Finance Corp. Ltd (HDFC), has launched Paragon Partners, a $200 million fund.
Maheshwari’s move also follows several other investment banking heads who have quit their franchises in the last couple of months to pursue new ventures or move to other industries.
On 28 June, The Economic Times reported that Sanjay Bhandarkar, who had been associated with investment bank NM Rothschild for around two decades, has quit. Bhandarkar, who was the managing director of Rothschild’s India operations, will continue to be associated with the firm in a consulting role till the deals he has been associated with are closed. An XLRI Jamshedpur alumnus, Bhandarkar had been with Rothschild India as managing director for the last 18 years.
In June, Mint reported that Jayesh Desai, co-head of Piramal Capital’s Structured Investments Group (SIG), is quitting the firm. Desai is likely to move into an operating role again.
Other prominent senior bankers who have recently quit their investment banking companies include Goldman Sachs India equity capital market head P.V. Krishna and Macquarie Group’s India’s investment banking head Gaurav Gupta.