INVESTMENT OPPORTUNITIES IN INDIAN FINANCIAL MARKETS · 2019-03-09 · INDIA –THE TIME IS NOW -...

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IDFC ASSET MANAGEMENT

For Investment Professional Use Only

January 2019

GAURAB PARIJA – HEAD – SALES & MARKETING

INVESTMENT OPPORTUNITIES IN INDIAN FINANCIAL MARKETS

1. India

2. Key drivers of future growth

3. Investment opportunity

4. Routes to participate in Indian Opportunity

2


3rd LargestGDP (PPP)

$ 10 Trillion

2nd LargestInternet Users

Fastestgrowing major economy in the world

2nd LargestRoad Network

$393 bnForeign Reserves

INDIA IN THE WORLD

3

2nd LargestRail Network

Source: International Monetary Fund

Source: Department of Industrial Policy and

Promotion, Government of India

India InvestmentCase

Partnershipopportunities

IndustryOverview


INDIA – THE TIME IS NOW

4

EC

ON

OM

IC

by 2025(BCG Study)

Huge Consumer Market

3.6Trillion$

Substantial GDP Growth

20Trillion$

SO

CIA

L

Average age

in 2025

Young Nation

29Years

More added to

middle class by 2025

Upward mobility

150Million

Literacy rate

by 2025

Skilled work force

99%

PO

LIT

ICA

L

Accounts opened under

‘Banking for all’

Inclusion in Banking system

241Million

Archaic laws

repealed to reduce

red-tape

Deregulation

1000+

by 2025(PPP)

Democracy

World’s Largest

Democracy1st

Infrastructure

1.5$Trillion

Investments

in next 20

years



IndustryOverview

INDIA – THE TIME IS NOW - ECONOMIC

Companiesachieving

global scale from their domestic

Indian business


5

5.6

6.6

7.27.6

6.6

7.27.7 7.8 8 8.1

7.8 7.7

7.36.9

6.7 6.56 6 5.9 5.8

2.2

1.5

2.4 2.4

1.6

2.3 2.5

1.9 1.7 1.6

2013 2014 2015 2016 2017 P 2018 P 2019 P 2020 P 2021 P 2022 P

India China US

• P = Projected• Source: International Monetary Fund

India remains an oasis of growth amongst slowing

global outlook

India is projected to be the fastest growing major

economy in 2017 surpassingChina

The trend is expected to continue at least till 2021

1. One of the world's fastest-growing major economies

Source: International Monetary Fund

Source: Department of Industrial Policy and

Promotion, Government of India

Source: Ernst & Young Emerging Markets Center



IndustryOverview

INDIA – THE TIME IS NOW - ECONOMIC


6

2. Indian Infrastructure

• Source: McKinsey Global Institute• Source: Press Information Bureau, Government of India• Source: Press Information Bureau, Government of India• Source: Government of India

350 mn Indians will move into cities over next 30 years

$ 1.5 tn Infrastructure investments planned for the next 20 years

Investments planned across key government initiatives

$ 106.5 bn$ 131.7 bn

$ 100 bn$ 58 bn

$ 184.5 bn Port and Port-led Industrialisation

Railways

Highways (Bharatmala & NHDP)

Industrial Corridors

Airports



IndustryOverview

INDIA – THE TIME IS NOW - SOCIAL


7

*Source: UNDP Asia Pacific Human Development Report 2016Source: United Nations Population FundSource: British CouncilSource: All India Management Association & The Boston Consulting Group

1,311

1,528

1,705

860

1,0331,145

27

31

37

0

5

10

15

20

25

30

35

40

0

200

400

600

800

1000

1200

1400

1600

1800

2015 2030 2050

Ag

e (y

ears

)

Po

pu

lati

on

(m

illi

on

)

Total Population Working age population

Median age of population

3. Largest Youth Population in the World

3X

2/3rd

1.14 bn

37.3 Yrs

Expected income levels by 2025

Share of Urban market in consumption

growth in the next 10 years

Expected Working population by 2025

Median age of India by 2050 –

“Young Nation”



IndustryOverview

INDIA – THE J.A.M TRINITY - SOCIAL

Companiesachieving


Indian business

AttractiveMacro Story

-Reforms plus

growth narrative


8

4. Transition from Physical to Digital

Jan Dhan

Integrated approach to bring financial inclusion of all citizens

~219 million accounts opened so far

Mobile

Indian market is the second largest in the world

More than 1 billion mobile subscribers

Aadhaar

Unique identity to every resident citizen

1 billion enrollments under Aadhaarscheme

Inclusivity, banking for all, connectivity for all; 3 pillars to Create Huge Demand, Motivate Investment, Manufacturing and Economic Growth



IndustryOverview

INDIA – THE TIME IS NOW - POLITICAL

Companiesachieving


Indian business


9

5. Pillars of Resurgent India

New ProcessesEase of Doing Business

GST

De-monetization

New Sectors Major FDI reforms and inflows

New ApproachMake in India

Digital India

Skill India

New Infrastructure Key Infrastructure and Urbanization

India – Design & InnovationStart Up India

Intellectual Property Rights

New Mind-set From red tape to red carpet

New Innovation and R&D



IndustryOverview

INDIA – THE TIME IS NOW - POLITICAL

Companiesachieving


Indian business


-Reforms plus

growth narrative


10

6. Rising Global Competitiveness

Source: World BankSource: World Economic Forum

77thPosition in ‘World Bank’s Ease od Doing Business Ranking 2018’, from 142nd in 2014

40thRank on the Global Competitiveness Index 2017-18

Key Reforms across various sectors

Defence Manufacturing

Pharmaceutical

Railways

Food Processing

Space

Telecommunication

Civil Aviation

Insurance & Pensions Medical Devices

Agriculture

Private Security Agencies

Single Brand Retail



IndustryOverview

STRATEGIC PERSPECTIVE - THE INDIAN INVESTMENT TIMELINE

Positive feedback loop from Scale effectDigitally interconnected continental sized economy creates viral growth opportunities

Larger companies drive greater Equity and Debt investment flows

Companiesachieving


Indian business

TechnologyNation

Technology - Government's reforms blue printStartup India - Vibrant start-up environment to improve productivity especially via B2B growth

J.A.M Trinity – Inclusivity, Banking for all, Connectivity for all


-Reforms plus

growth narrative

Outlier in the EM commodity / China driven basketPolitical integration

Taxation reforms - Value added tax regime for Economic Integration and increase in tax compliance

Shifting of the domestic savings from real assets to financial assets


Scal

e

Reforms momentum plus digitization of the economy will create global scale companies which reflexively attract more investment flows

11



IndustryOverview

CAPTURING THE

INDIAN INVESTMENT

OPPORTUNITY


12



IndustryOverview

CAPTURING THE INDIAN INVESTMENT OPPORTUNITIES


TechnologyNation

Global ScaleCompanies

Indian diversifiedlong only equity funds Indian VC & PE funds

Indian Private Equity &Private credit funds

Well penetrated

Indian fixed

income funds

Indian Long / ShortEquity funds which

capture opportunitiesfrom potential winners &losers due to structural

changes in India.

Thematic funds

Smart beta fundsLess penetrated

Indian multi-asset funds

Large dispersion ofreturns in Indian equity

markets providesopportunities to capture

inter and intra sectorlong and short alpha


A wide spectrum of opportunities.

13



IndustryOverview

PRODUCT OPTIONS

Growth seeking InvestorsMain Strategy Sub Strategies

Diversified

Equity Funds

• India all cap growth

• India midcap growth

• Part of Global / EM / APAC funds

Main Strategy Sub Strategies

• GrowthIndia focused

Smart beta strategies• Value

• Quality + Growth

• Value + Growth

• Currency Hedged


Thematic and Sector Focused

Funds

InfrastructureBespoke themes / sectors


14

Equity based solutions




INDIA



IndustryOverview

PRODUCT OPTIONS

Yield Seeking investorsMain Strategy Sub Strategies

India focused

fixed incomefund

• G-Sec. & Corps• Hard currency bonds• Local currency bonds


India multi–asset,multi strategy funds

• Fixed Income• Equity Arbitrage

• Dividend Yield Cos

• Special Situations


India absolutereturn funds

• Long / Short• Equity Arbitrage• Covered Call• Tail Risk Hedging


15

Fixed Income based solutions

Alternative Investment based solutions

Multi Asset based solutions

INDIA



IndustryOverview

STRUCTURE OPTIONS FOR INDIA FOCUSED FUNDSSub-advisory services to partner firm which acts as the Investment Manager

Partner owned

Advisor to the Manager

InvestmentCompany

Partner’s Clients &

Distributors

Indian AssetManagement

Purchase / Saleof Indian securities

Partner sets up an

Investment Company

which invests directly

in India based on

advisory services

offered by Indian AMC

Portfolio of Indian Securities

IDFC AMC was previously the Investment Advisor to Natixis Asset Management (Asia) for the Natixis IDFC India Equities Fund (Luxembourg domiciled UCITs fund part of Natixis International funds SICAV)


16



IndustryOverview

INDIA FOCUSED FUNDS - WHITE LABELED SOLUTIONS

Feeder Vehicle Investment Manager

Transactions inIndian Securities

Partner’s clients and

Distributors

Indian AssetManagement

Portfolio ofIndian

Securities

Owned byPartner

Partner sets up a Feeder fund for its clients which invests into an Offshore or OnshoreInvestment Company managed by Indian AMC for investing in Indian securities


Partner sets up feeder structures into INR or USD denominated IDFC Funds

17



IndustryOverview


INVESTMENT EXPERTISE AND SOLUTIONS

Mutual Funds Alternative

Investment Funds

Portfolio

Management

Services

• Equity strategies

• Fixed Income strategies

• Absolute returns based long short strategies

•Artificial Intelligence based investment strategy

18

Offshore Funds

•SCA in the UAE

•MAS in Singapore



IndustryOverview


INDIAN

ASSET MANAGEMENT

INDUSTRY - OVERVIEW

19



IndustryOverview


INDIAN ASSET MANAGEMENT INDUSTRY

7284~

Listed Companies

42 AMCs, $ 342 bn* AUM, 80.3 mn Folios

Mutual Fund Industry

5.5 times

Source: AMFI, NSE, BSE, IBEF.com

~ Total of companies listed on NSE as on October 2018 and BSE as on August 2018*Between April to Nov 18

^ from 2008 till 2018

Growth in last 10 years

20



REGULATOR

S.E.B.I.

Securities Exchange Board Of India

IndustryOverview

IDFC Asset Management Company Ltd.

One Indiabulls Centre, 6th Floor

841 Jupiter Mills Compound,

Elphinstone Road (West)

Mumbai 400 013

INDIA

www.idfc.com

THANK YOU

21

http://www.idfc.com/

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INVESTMENT OPPORTUNITIES IN INDIAN FINANCIAL MARKETS · 2019-03-09 · INDIA –THE TIME IS NOW -...

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