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IDFC ASSET MANAGEMENT
For Investment Professional Use Only
January 2019
GAURAB PARIJA – HEAD – SALES & MARKETING
INVESTMENT OPPORTUNITIES IN INDIAN FINANCIAL MARKETS
1. India
2. Key drivers of future growth
3. Investment opportunity
4. Routes to participate in Indian Opportunity
2
For Investment Professional Use Only
3rd LargestGDP (PPP)
$ 10 Trillion
2nd LargestInternet Users
Fastestgrowing major economy in the world
2nd LargestRoad Network
$393 bnForeign Reserves
INDIA IN THE WORLD
3
2nd LargestRail Network
Source: International Monetary Fund
Source: Department of Industrial Policy and
Promotion, Government of India
India InvestmentCase
Partnershipopportunities
IndustryOverview
For Investment Professional Use Only
INDIA – THE TIME IS NOW
4
EC
ON
OM
IC
by 2025(BCG Study)
Huge Consumer Market
3.6Trillion$
Substantial GDP Growth
20Trillion$
SO
CIA
L
Average age
in 2025
Young Nation
29Years
More added to
middle class by 2025
Upward mobility
150Million
Literacy rate
by 2025
Skilled work force
99%
PO
LIT
ICA
L
Accounts opened under
‘Banking for all’
Inclusion in Banking system
241Million
Archaic laws
repealed to reduce
red-tape
Deregulation
1000+
by 2025(PPP)
Democracy
World’s Largest
Democracy1st
Infrastructure
1.5$Trillion
Investments
in next 20
years
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE TIME IS NOW - ECONOMIC
Companiesachieving
global scale from their domestic
Indian business
For Investment Professional Use Only
5
5.6
6.6
7.27.6
6.6
7.27.7 7.8 8 8.1
7.8 7.7
7.36.9
6.7 6.56 6 5.9 5.8
2.2
1.5
2.4 2.4
1.6
2.3 2.5
1.9 1.7 1.6
2013 2014 2015 2016 2017 P 2018 P 2019 P 2020 P 2021 P 2022 P
India China US
• P = Projected• Source: International Monetary Fund
India remains an oasis of growth amongst slowing
global outlook
India is projected to be the fastest growing major
economy in 2017 surpassingChina
The trend is expected to continue at least till 2021
1. One of the world's fastest-growing major economies
Source: International Monetary Fund
Source: Department of Industrial Policy and
Promotion, Government of India
Source: Ernst & Young Emerging Markets Center
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE TIME IS NOW - ECONOMIC
For Investment Professional Use Only
6
2. Indian Infrastructure
• Source: McKinsey Global Institute• Source: Press Information Bureau, Government of India• Source: Press Information Bureau, Government of India• Source: Government of India
350 mn Indians will move into cities over next 30 years
$ 1.5 tn Infrastructure investments planned for the next 20 years
Investments planned across key government initiatives
$ 106.5 bn$ 131.7 bn
$ 100 bn$ 58 bn
$ 184.5 bn Port and Port-led Industrialisation
Railways
Highways (Bharatmala & NHDP)
Industrial Corridors
Airports
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE TIME IS NOW - SOCIAL
For Investment Professional Use Only
7
*Source: UNDP Asia Pacific Human Development Report 2016Source: United Nations Population FundSource: British CouncilSource: All India Management Association & The Boston Consulting Group
1,311
1,528
1,705
860
1,0331,145
27
31
37
0
5
10
15
20
25
30
35
40
0
200
400
600
800
1000
1200
1400
1600
1800
2015 2030 2050
Ag
e (y
ears
)
Po
pu
lati
on
(m
illi
on
)
Total Population Working age population
Median age of population
3. Largest Youth Population in the World
3X
2/3rd
1.14 bn
37.3 Yrs
Expected income levels by 2025
Share of Urban market in consumption
growth in the next 10 years
Expected Working population by 2025
Median age of India by 2050 –
“Young Nation”
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE J.A.M TRINITY - SOCIAL
Companiesachieving
global scale from their domestic
Indian business
AttractiveMacro Story
-Reforms plus
growth narrative
For Investment Professional Use Only
8
4. Transition from Physical to Digital
Jan Dhan
Integrated approach to bring financial inclusion of all citizens
~219 million accounts opened so far
Mobile
Indian market is the second largest in the world
More than 1 billion mobile subscribers
Aadhaar
Unique identity to every resident citizen
1 billion enrollments under Aadhaarscheme
Inclusivity, banking for all, connectivity for all; 3 pillars to Create Huge Demand, Motivate Investment, Manufacturing and Economic Growth
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE TIME IS NOW - POLITICAL
Companiesachieving
global scale from their domestic
Indian business
For Investment Professional Use Only
9
5. Pillars of Resurgent India
New ProcessesEase of Doing Business
GST
De-monetization
New Sectors Major FDI reforms and inflows
New ApproachMake in India
Digital India
Skill India
New Infrastructure Key Infrastructure and Urbanization
India – Design & InnovationStart Up India
Intellectual Property Rights
New Mind-set From red tape to red carpet
New Innovation and R&D
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA – THE TIME IS NOW - POLITICAL
Companiesachieving
global scale from their domestic
Indian business
AttractiveMacro Story
-Reforms plus
growth narrative
For Investment Professional Use Only
10
6. Rising Global Competitiveness
Source: World BankSource: World Economic Forum
77thPosition in ‘World Bank’s Ease od Doing Business Ranking 2018’, from 142nd in 2014
40thRank on the Global Competitiveness Index 2017-18
Key Reforms across various sectors
Defence Manufacturing
Pharmaceutical
Railways
Food Processing
Space
Telecommunication
Civil Aviation
Insurance & Pensions Medical Devices
Agriculture
Private Security Agencies
Single Brand Retail
India InvestmentCase
Partnershipopportunities
IndustryOverview
STRATEGIC PERSPECTIVE - THE INDIAN INVESTMENT TIMELINE
Positive feedback loop from Scale effectDigitally interconnected continental sized economy creates viral growth opportunities
Larger companies drive greater Equity and Debt investment flows
Companiesachieving
global scale from their domestic
Indian business
TechnologyNation
Technology - Government's reforms blue printStartup India - Vibrant start-up environment to improve productivity especially via B2B growth
J.A.M Trinity – Inclusivity, Banking for all, Connectivity for all
AttractiveMacro Story
-Reforms plus
growth narrative
Outlier in the EM commodity / China driven basketPolitical integration
Taxation reforms - Value added tax regime for Economic Integration and increase in tax compliance
Shifting of the domestic savings from real assets to financial assets
For Investment Professional Use Only
Scal
e
Reforms momentum plus digitization of the economy will create global scale companies which reflexively attract more investment flows
11
India InvestmentCase
Partnershipopportunities
IndustryOverview
CAPTURING THE
INDIAN INVESTMENT
OPPORTUNITY
For Investment Professional Use Only
12
India InvestmentCase
Partnershipopportunities
IndustryOverview
CAPTURING THE INDIAN INVESTMENT OPPORTUNITIES
AttractiveMacro Story
TechnologyNation
Global ScaleCompanies
Indian diversifiedlong only equity funds Indian VC & PE funds
Indian Private Equity &Private credit funds
Well penetrated
Indian fixed
income funds
Indian Long / ShortEquity funds which
capture opportunitiesfrom potential winners &losers due to structural
changes in India.
Thematic funds
Smart beta fundsLess penetrated
Indian multi-asset funds
Large dispersion ofreturns in Indian equity
markets providesopportunities to capture
inter and intra sectorlong and short alpha
For Investment Professional Use Only
A wide spectrum of opportunities.
13
India InvestmentCase
Partnershipopportunities
IndustryOverview
PRODUCT OPTIONS
Growth seeking InvestorsMain Strategy Sub Strategies
Diversified
Equity Funds
• India all cap growth
• India midcap growth
• Part of Global / EM / APAC funds
Main Strategy Sub Strategies
• GrowthIndia focused
Smart beta strategies• Value
• Quality + Growth
• Value + Growth
• Currency Hedged
Main Strategy Sub Strategies
Thematic and Sector Focused
Funds
InfrastructureBespoke themes / sectors
For Investment Professional Use Only
14
Equity based solutions
Equity based solutions
Equity based solutions
Equity based solutions
INDIA
India InvestmentCase
Partnershipopportunities
IndustryOverview
PRODUCT OPTIONS
Yield Seeking investorsMain Strategy Sub Strategies
India focused
fixed incomefund
• G-Sec. & Corps• Hard currency bonds• Local currency bonds
Main Strategy Sub Strategies
India multi–asset,multi strategy funds
• Fixed Income• Equity Arbitrage
• Dividend Yield Cos
• Special Situations
Main Strategy Sub Strategies
India absolutereturn funds
• Long / Short• Equity Arbitrage• Covered Call• Tail Risk Hedging
For Investment Professional Use Only
15
Fixed Income based solutions
Alternative Investment based solutions
Multi Asset based solutions
INDIA
India InvestmentCase
Partnershipopportunities
IndustryOverview
STRUCTURE OPTIONS FOR INDIA FOCUSED FUNDSSub-advisory services to partner firm which acts as the Investment Manager
Partner owned
Advisor to the Manager
InvestmentCompany
Partner’s Clients &
Distributors
Indian AssetManagement
Purchase / Saleof Indian securities
Partner sets up an
Investment Company
which invests directly
in India based on
advisory services
offered by Indian AMC
Portfolio of Indian Securities
IDFC AMC was previously the Investment Advisor to Natixis Asset Management (Asia) for the Natixis IDFC India Equities Fund (Luxembourg domiciled UCITs fund part of Natixis International funds SICAV)
For Investment Professional Use Only
16
India InvestmentCase
Partnershipopportunities
IndustryOverview
INDIA FOCUSED FUNDS - WHITE LABELED SOLUTIONS
Feeder Vehicle Investment Manager
Transactions inIndian Securities
Partner’s clients and
Distributors
Indian AssetManagement
Portfolio ofIndian
Securities
Owned byPartner
Partner sets up a Feeder fund for its clients which invests into an Offshore or OnshoreInvestment Company managed by Indian AMC for investing in Indian securities
For Investment Professional Use Only
Partner sets up feeder structures into INR or USD denominated IDFC Funds
17
India InvestmentCase
Partnershipopportunities
IndustryOverview
For Investment Professional Use Only
INVESTMENT EXPERTISE AND SOLUTIONS
Mutual Funds Alternative
Investment Funds
Portfolio
Management
Services
• Equity strategies
• Fixed Income strategies
• Absolute returns based long short strategies
•Artificial Intelligence based investment strategy
18
Offshore Funds
•SCA in the UAE
•MAS in Singapore
India InvestmentCase
Partnershipopportunities
IndustryOverview
For Investment Professional Use Only
INDIAN
ASSET MANAGEMENT
INDUSTRY - OVERVIEW
19
India InvestmentCase
Partnershipopportunities
IndustryOverview
For Investment Professional Use Only
INDIAN ASSET MANAGEMENT INDUSTRY
7284~
Listed Companies
42 AMCs, $ 342 bn* AUM, 80.3 mn Folios
Mutual Fund Industry
5.5 times
Source: AMFI, NSE, BSE, IBEF.com
~ Total of companies listed on NSE as on October 2018 and BSE as on August 2018*Between April to Nov 18
^ from 2008 till 2018
Growth in last 10 years
20
India InvestmentCase
Partnershipopportunities
REGULATOR
S.E.B.I.
Securities Exchange Board Of India
IndustryOverview
IDFC Asset Management Company Ltd.
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INDIA
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THANK YOU
21
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