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Avendus’ hedge fund crosses $78 mn in assets under management

01 May, 2017

Diversified financial services firm Avendus Group, which is backed by private equity major Kohlberg Kravis Roberts & Co Ltd (KKR), has crossed Rs 500 crore (around $77.8 million) in assets under management (AUM) two-and-a-half months after launching its first equity long-short alternative investment fund (AIF), it said in a statement.

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

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

“I wish to thank our investors and distribution partners for showing confidence in the product and our team. We are delighted to see so many of our previous investors come into the fund,” said Holland, who previously worked with Ambit Holdings and DSP Merrill Lynch.

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 Vaibhav 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 ($3.25 million 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 Securities and Exchange Board of India (SEBI)’s AIF rules, 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 make 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. These two investors together held around 41% stake in Avendus.

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Avendus’ hedge fund crosses $78 mn in assets under management

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