Samana Global Business Solutions Ltd, a Kerala-based diversified business group, is looking to float its maiden alternative investment fund (AIF) to invest in listed and unlisted Indian companies.
The Samana Global Fund, or SGF 2020, aims to mobilise Rs 4,000 crore ($560 million). It plans to invest in sectors such as hospitality, healthcare, tech-enabled farming and horticulture, education, real estate, retail and information technology, the company said.
Samana Global is the sponsor of the close-ended fund while IBMC Investment Managers & Advisors is its investment manager.
SGF 2020 will be registered as a category II fund with the Securities and Exchange Board of India (SEBI) this week and launched in January, said Sajit Kumar PK, CEO and MD at IBMC Investment.
Kumar declined to name a particular investor for compliance reasons, but said the fund aims to raise its capital from a variety of investors such as pension funds, sovereign wealth funds and even fund-of-funds. It will also tap into family offices and high-net-worth individuals, including those from outside India.
The fund has a five-year lock-in and an investment horizon of five to nine years. It is targeting to offer about 14% returns a year after accounting for expenses and taxes, keeping in mind the opportunities and risks to its overall investment theme, Kumar said.
“As per regulations, we have 18 months to launch the fund and raise capital. Based on the response, we will decide whether we wish to extend or not,” Kumar said.
“However, we believe this fund will help investors, especially the ones based aboard, to invest in India through a transparent platform that the AIF is, instead of investing directly, which is a tough process,” he said. Some institutional investors have shown commitments, he added.
Samana is looking to benefit with an investment theme focussed at the potential and prospects of India’s macroeconomic growth driven by a large population and diverse demographics that supports consumption and investment.
“Our strategy is to deploy capital in parallel to our fundraising and not keep the capital sit idle. Our aim is to offer maximum returns to investors, especially to foreign investors and the ones based in West Asia, by offering diversification via investments in non-oil sectors,” Kumar said. He added that India is in a growth stage led by urbanisation and development.
Kumar emphasised that India’s growth will be driven by the seven sectors on which the AIF is focusing.
Samana has assigned sectoral weights to create its portfolio. For instance, it aims to invest 5-20% capital in a single company in proportion to the weight assigned and the capital allocated to each of the seven sectors or verticals it aims to invest.
“IoT (internet of things), fintech, and AI (artificial intelligence) are new-generation themes. These three themes are going to be market leaders in the future,” Kumar said.
SGF 2020 aims to set up a feeder fund at Abu Dhabi Global Market--an international financial centre in the Gulf emirate--to mobilise foreign capital looking to invest in India, Kumar said.
SEBI had introduced its AIF regulations in 2012 to supervise the unregulated fund market in India comprising private equity funds, real estate funds and hedge funds, besides encouraging new capital formation and protecting investors. Since then, more than 500 AIFs have registered with SEBI across all categories as on November 2018.
Under the AIF regulations, Category-II comprises private equity funds and debt funds. Category-I AIFs include venture capital funds, infrastructure funds and social venture funds while Category-III AIFs include PIPE (private investment in public equity) funds and hedge funds that use complex trading strategies in public equity markets.
Affluent investors in India have long been keen on exploring alternative investment options to diversify their portfolio, giving rise to an increase in AIFs, according to industry observers.
VCCircle had reported in September 2017 how a growing number of wealthy investors are investing in diverse AIFs, indicating deepening of public markets in India.
In February this year, panellists at the VCCircle India Limited Partners Summit had forecasted that the size of the alternative investment fund industry in the country is likely to more than double over the next two to three years, thanks in part to favourable policies by the government and regulators.