Mumbai: Avendus Capital, which has raised close to $1.3 billion in India under its public equities alternative asset management business, is planning to grow the business by taking its two flagship products to new countries, said Ranu Vohra, co-founder and managing director.
KKR and Co.-controlled Avendus launched its public equities focused alternative asset management business earlier this year with the Avendus Absolute Return Fund, a fund led by Andrew Holland and Vaibhav Sanghavi, which managed to raise close to $500 million in a span of just under eight months. In August, Avendus acquired Ocean Dial Asset Management Ltd, a UK-based asset management company.
While the Absolute Return Fund is a long-short equity fund, funds managed by Ocean Dial are long-only equity funds.
“We will follow two vectors of growth. One is specific to the business led by Andrew Holland and Vaibhav Sanghavi, which is built currently on domestic money. We will try and grow it outside in markets such as the US and Europe. While for Ocean Dial, the obvious geographies to grow in are India and the US. We expect that the excellence that we are trying to build in the public equities side will also find resonance with investors in US and India,” said Vohra.
Avendus is currently working on a plan to take these two public equities strategies to US investors.
“We are still figuring out what strategy to follow. In the initial stages, it is less likely to be a distributor-led strategy and more likely to be our own internal efforts. At some stage, we might hire distributors. We are planning to put in a team for this purpose,” Vohra added.
According to Vohra, there are strong tailwinds in the market and that has helped Avendus Capital scale up its business from zero to $1.3 billion in assets under management (AUM) within a year’s time.
“There is a good amount of tailwind in the market, there is domestic liquidity. There is an overall interest in families to increase their allocation to risk assets. And Avendus is playing itself in that category. These products are well suited to that category,” said Vohra.
We are trying to target the risk return curve and areas in the risk return curve are hitherto unoccupied, he added.
“We noticed that if you can create and structure the right products which offer returns which are either closer to equity with less risk (hedged), there is a market for that product,” he said.
While majority of the assets raised by Avendus have come from organic growth, almost 40% of the AUM growth was achieved through the acquisition of Ocean Dial. However, going into the next year, Avendus will focus largely on growing the business organically.
“A traditional build-versus-buy decision is also about what kind of runway you have. So Ocean Dial acquisition was an opportunity that if we had a platform available, we could do far more with it in the opportunity that is presented today. But now we have our hands full. So we are not proactively looking to acquire more in alternative asset management,” said Vohra.
Avendus also plans to build upon its digital and technology fund Zodius, Vohra added.
Last month, Avendus acquired the technology-focused PE company Zodius Capital Advisors, Mint reported. In 2014, Zodius partnered with Avendus to raise $500 million to invest in firms in the high-growth digital and SMAC (social, mobile, analytics and cloud)-based business services.
Avendus plans to launch, early next year, a $250 million fund targeting mid-to-late stage growth opportunities in consumer and digital sectors under the Zodius platform.
Apart from the public equities focused funds, other business of Avendus—wealth management and non-banking financial services company (NBFC)—are also raising funds.
In September, Avendus Wealth Management Pvt. Ltd announced the launch of its first Category III AIF (alternative investment fund), Avendus Phoenix Fund. In the previous month, Avendus Finance, the credit solutions arm, announced the launch of its Rs500 crore structured credit fund.