Diversified financial services firm Avendus Group, which is backed by private equity major Kohlberg Kravis Roberts & Co Ltd, said it will acquire UK-based asset management firm Ocean Dial Asset Management Ltd for an undisclosed amount to fortify its presence in the asset management space.
Avendus signed an agreement to acquire 100% shareholding from Ocean Dial’s chairman and managing director Raju Shukla, the Mumbai-based firm said in a statement.
Ocean Dial has three funds and assets under management (AUM) worth £450 million (around Rs 3,734.1 crore) invested in long-only Indian equities. The deal will add strength to Avendus’ first fund, a long-short alterative investment fund (AIF) that crossed Rs 1,000 crore (around $156 million) in AUM four months after the launch in February.
“The acquisition will help us scale up our presence in public equities. As the public markets are deepening, we are observing a switch from mutual funds to alternative investment funds. The acquisition is synergistic, as we will work to make Ocean Dial a bigger play by bringing in investors from other geographies into the fold,” said Ranu Vohra, Avendus’ co-founder, managing director and chief executive.
KKR—which manages multiple alternative asset classes, including private equity—in November 2015 agreed to invest in Avendus for a 70% stake through a combination of new shares and a secondary sale of stock by existing investors. KKR purchased shares from Eastgate Capital and Americorp Ventures, an early investor in Avendus. The two investors together held around 41% stake in Avendus.
After KKR acquired the majority stake in Avendus, the firm has been transforming from a pure-play investment bank to a full-fledged financial services company by offering products in niche areas—alternative asset management and structured credit solutions.
The acquisition also enabled Avendus to scale up its services in wealth management and private equity, besides foraying into the NBFC space.
In February this year, Avendus launched a $75 million (Rs 500 crore then) hedge fund after it hired the 12-member core team of Mumbai-based Ambit Holdings’ asset management business.
Andrew 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.
The fund 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.