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Avendus’ hedge fund crosses $156 mn in assets under management

31 July, 2017

Diversified financial services firm Avendus Group, which is backed by private equity major Kohlberg Kravis Roberts & Co Ltd (KKR), has crossed Rs 1,000 crore (around $156 million) in assets under management four months after the launch of its first long-short alternative investment fund, the firm said in a statement.

The Avendus Absolute Return Fund, a category-III alternative investment fund (AIF) managed by chief executive officer Andrew Holland, raised the corpus from high-net-worth individuals (HNIs) besides multi-family offices (MFOs) and corporate treasuries.

The hedge fund’s assets under management (AUM) had crossed Rs 500 crore ($77.8 million) in early May.

The fund, which is operated by Avendus Capital Public Markets Alternate Strategies LLP, invests in Indian equities and equity derivatives instruments.

“We have seen growing interest from investors in AIFs in India. AIFs have the ability to offer products which challenge the traditional risk-return curve. We look forward to offering differentiated products that will help investors achieve their financial goals,” said Vaibhav Sanghavi, co-chief executive officer and fund manager, Avendus Capital Public Markets Alternate Strategies LLP.

In February, Avendus launched the $75 million (Rs 500 crore then) hedge fund after it hired the 12-member core team of Mumbai-based Ambit Holdings’ asset management business.

Holland and Sanghavi — who were previously CEO and managing director, respectively, at Ambit Investment Advisory — are managing the fund along with a team that had managed one of the largest domestic AIFs at Ambit.

In 2016, Bloomberg had ranked their previous fund in the top 91 percentile among 800 global hedge funds. Holland was managing Ambit Investment Advisors’ flagship hedge fund, Ambit Alpha Fund, which was the largest category-III AIF in India.

It was launched in June 2013 with an AUM of Rs 20 crore ($3.25million then) raised from Ambit Holdings and a few affluent individuals. The fund was sold off to Edelweiss Financial Services Ltd for an undisclosed amount.

As per the Securities and Exchange Board of India (SEBI)’s rules for AIFs, a category-III alternative investment fund is defined as a privately pooled investment fund, irrespective of its destination, in the form of a trust or a company or a body corporate or a limited liability partnership (LLP).

Category-III funds undertake leverage to a large extent and invest keeping in mind negative market conditions using complex trading strategies. These funds trade with a view to making short-term returns and are allowed to invest in category-I and category-II AIFs. With the launch of the new hedge fund business, Avendus is targeting a portfolio size of $2 billion in five years.

In November 2015, KKR agreed to invest in Avendus Capital for a 70% stake through a combination of new shares and a secondary sale of stock by existing investors.

The acquisition enabled Avendus scale up its services in wealth management and private equity, besides foraying into the NBFC space with credit solutions. KKR purchased shares from Eastgate Capital and Americorp Ventures, an early investor in Avendus. The two investors together held around 41% stake in Avendus.

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Avendus’ hedge fund crosses $156 mn in assets under management

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