Asset management companies are launching offshore funds to capitalize on renewed interest in Indian assets
Asset management companies have begun selling India to the world yet again. A few domestic fund houses, along with scores of smaller investment companies, are targeting overseas investors through offshore offerings. While a good number of them are finding it difficult to find investors, funds launched by firms with good track record and credibility are attracting investments.
ICICI International, Kotak Mahindra, UTI International, Baer Capital, Tata Capital and Alpen Capital are amongst the leading fund houses considering to launch offshore investment schemes. Birla Sunlife is currently raising money to start its offshore realty fund.
"Post the fall of Lehman Brothers, brands and brand value have lost credibility. Investors are only looking at past performance and investment objectives while investing. Funds with good fund management team get money; others will have to settle for lesser investments," said the product head of leading domestic fund house. According to investment experts stationed abroad, India is regaining popularity among foreign investors. The tag of being 'one of the best risk-adjusted return markets' had eluded India, after offshore funds shed 60-80% (in value) at the height of bear market.
"We are getting good response from high net worth individuals (HNIs) for our real estate fund," said Shashi Kumar, real estate (head), Birla Sunlife Asset Management.
"Investors, for sure, have become very cautious, while investing into funds. A lot of research is done by investors themselves before investing in an offshore fund," Mr Kumar added. According to fund-runners, Japanese and Korean investors (mainly pension funds) are finding India attractive for capital investments. Investments from the Gulf-based investors have dipped greatly over the past one year. Investments from Europe and America is yet to gather steam, said experts.
"Compared with the past year, there is genuine interest among investors to park their money in Indian asset classes. Money will continue to flow into Indian markets; offshore funds could well be one of the routes. The lone impediment (to inflows) will be the lengthy regulatory requirements to invest in Indian markets," said Barjeel Geojit Securities CEO Krishnan Ramachandran.
Offshore funds are specialise in investing in foreign companies or corporations. These funds have non-residential investors (often high net worth investors and institutions), and are regulated by the provisions of the foreign countries where these are registered. Most of these funds are launched from tax havens like Mauritius or Cayman Islands. Overseas funds have been active in India, investing in all sectors of the equities market.
As per market estimates, there are about 50 offshore funds (with over 150 variants/plans or themes) investing in India. The $6-billion HSBC GIF Indian Equity fund (with about 11 variants/themes) was the biggest offshore fund until some time back.