Rise of Alternates in the New Age of Investing | PMS AIF WORLD | Summary and Q&A

TL;DR

The alternate investment space in India is growing rapidly, driven by factors such as global trends, private equity, retail investors, and the emergence of Gift City.

Key Insights

• 📊 Key Insight 1: The alternate investment space in India has experienced meteoric growth, with the industry size reaching close to 10 lakh crores, driven by factors such as private debt and private equity.
• 🔍 Key Insight 2: Globally, alternate assets constitute around 21% of the global asset market, amounting to nearly 100 trillion dollars. The private debt and private equity sectors within the alternate asset space are gaining significant attention and expected to grow by 15-20% annually.
• 💡 Key Insight 3: There has been a notable shift in investor preference from institutional to retail, with retail investors now driving the growth of the alternate investment industry. This is attributed to retail investors' liking for innovation and higher return expectations.
• 🌍 Key Insight 4: The global alternate asset market is expected to be dominated by private equity and private debt, generating more than 60% of total revenue over the next few years.
• 💰 Key Insight 5: The Indian alternate investment landscape has seen significant growth in Cat 2 funds, primarily driven by private equity and private debt investments. This mirrors the global trend and presents opportunities for investors.
• 💼 Key Insight 6: PMS (Portfolio Management Services) industry in India has witnessed consolidation in recent years. However, with SEBI bringing parity to brokerage on all product platforms, PMS is expected to regain traction.
• 🏛️ Key Insight 7: Gift City in India is becoming an attractive platform, with its world-class infrastructure, investor-friendly regulatory environment, and tax incentives. It offers opportunities for Indians to diversify globally and for foreign investors to access Indian opportunities.
• 🔎 Key Insight 8: The scope for creating hybrids in the AI (Alternative Investment) space is significant. This includes strategies that combine listed and unlisted assets, as well as exploring different asset classes like wine and art. These hybrids can cater to different investor preferences and offer unique investment opportunities.

Transcript

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Questions & Answers

Q: How has the alternate investment landscape in India evolved in the past few years?

The alternate investment industry in India has experienced rapid growth, with AIFs and PMSs reaching a size of close to 10 lakh crores. This growth is driven by factors such as the rise of private equity and private debt, increasing interest from retail investors, and the emergence of Gift City as a global investment platform.

Q: What are the key factors driving the growth of the alternate investment space globally?

Globally, alternate assets constitute around 21 percent of the global asset market, with private debt and private equity being the leading factors. Retail investors are playing a major role in driving this growth, attracted by innovations and higher return expectations. The acceptance of new ideas and innovation in the industry, however, has decreased in recent years.

Q: How is the PMS landscape evolving in India?

The size of discretionary PMS in India stood at 2.79 lakh crores with 1.2 lakh clients as of May 2023. PMS providers are seeing a consolidation phase in the industry, but the recent parity brought by SEBI to brokerage in all product platforms is expected to bring back traction to PMSs. Retail investors are increasingly showing interest in PMSs due to the flexibility and deeper engagement they offer.

Q: What opportunities does Gift City present for investors?

Gift City is a world-class infrastructure in India that aims to attract global investors and provide access to Indian opportunities. It offers a friendly regulatory environment, tax incentives, and options for both outbound and inbound investments. Gift City is expected to become a major platform for investors diversifying globally and for those seeking exposure to India in a more streamlined manner.

Q: Are there opportunities for hybrid strategies in the AIF space?

Yes, there are opportunities to create hybrids within AIFs, combining unlisted and listed assets. This strategy allows for flexibility, liquidity, and the potential for higher returns. By investing in pre-IPO stage stocks or using distinct investment approaches within AIFs, investors can benefit from the advantages of both unlisted and listed assets.

Q: What sets your company apart in the alternate investment space?

Our company has a long-standing track record of being the most trusted and consistent player in portfolio management. We follow a qglp philosophy, focusing on risk management, and have a team of experienced professionals dedicated to delivering consistent risk-adjusted returns. We offer innovative investment strategies and a deep engagement with clients to meet their long-term financial goals.

Q: How do long-short strategies fit into the investment landscape?

Long-short strategies are suited to investors seeking higher returns than traditional fixed-income investments, but with less volatility than pure equity investments. These strategies aim to generate alpha by taking long positions in stocks expected to rise and short positions in stocks expected to fall. Long-short strategies offer risk mitigation and yield potential, making them attractive to certain investor types.

Summary & Key Takeaways

• The alternate investment industry in India has grown significantly in recent years, with AIFs and PMSs reaching a size of close to 10 lakh crores.

• Globally, alternate assets constitute around 21 percent of the global asset market, with private debt and private equity being the leading factors.

• Retail investors are playing a major role in driving the growth of the alternate investment space, attracted by innovations and higher return expectations.