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IIFL arm to launch two funds for HNIs to invest in emerging market equities, REITs

Amit Shah, chief executive of IIFL Asset Management Business. The two funds will invest in global emerging market equities and in REITs (real estate investment trusts), respectively.

2 min read . Updated: 14 Feb 2018, 01:17 AM IST Swaraj Singh Dhanjal

The two funds will operate under the liberalized remittance scheme (LRS) route, which allows Indian citizens to transfer capital out of the country

Mumbai: Financial services group IIFL Holdings Ltd’s asset management business is launching two new funds for high net-worth individuals (HNIs) to invest funds in overseas capital markets, a senior executive of the company said.

The two funds will invest in global emerging market equities and in REITs (real estate investment trusts), respectively.

“We are launching an emerging markets strategy, which will provide investors to participate in global emerging markets stocks like Tencent and others. We are also launching an REITs fund, which will invest in global REITs. This will be investing in Singapore office space, US senior housing, China office space—which are booming segments and where the yields are very good," said Amit Shah, chief executive of IIFL Asset Management Business.

The funds will operate under the LRS (liberalized remittance scheme) route, which allows Indian citizens to transfer capital out of the country. Under LRS, all resident individuals, including minors, are allowed to remit up to $250,000 per financial year. The scheme was introduced in 2004.

IIFL currently operates a fixed income fund through this route.

According to Shah, the LRS route allows investors the benefit of access to global markets, diversification through exposure to different asset classes and non-traditional investment routes such as exchange traded funds (ETFs) and the ability to build a corpus outside India.These funds will be managed by IIFL’s fund managers based out of Singapore.

IIFL at present manages around $350 million of assets invested in overseas markets, including capital raised through LRS.

“LRS is a small portion right now. Till now we have been raising money through our own channel. We have started meeting with banks and other channel partners and they are very keen to participate," said Shah.

“We expect that in the next 4-5 years this can be a $1 billion strategy for the firm," he added.

IIFL’s wealth and asset businesses offer a broad range of investment products for HNIs and family offices across various asset classes. As of 31 December, the company’s total assets under management stood at Rs1.28 trillion, a 58% jump year on year.

AUM of the firm’s alternatives business, which manages several alternative investment funds (AIFs) grew to Rs11,600 crore at the end of the December quarter, a year-on-year growth of 63%.

In the last one year, the firm has launched various alternative investment funds such as a pre-initial public offering (IPO) fund and a housing fund.

In November, Mint reported that IIFL Investment Managers is launching its latest real estate debt fund with a target corpus of almost $500 million. The latest real estate focused alternatives fund from IIFL will focus on investing in the housing space, especially in affordable housing projects.

IIFL has raised close to Rs4,700 crore since 2012 across various real estate funds under Sebi’s alternative investment fund regime.

The firm’s pre-IPO fund, IIFL Special Opportunities Fund, has raised around Rs8,000 crore.

The fund has made several large investments in companies such as ICICI Lombard General Insurance Co. Ltd, Reliance Nippon Asset Management Co. Ltd, National Stock Exchange of India Ltd and Nazara Technologies Ltd.