EDELWEISS - MAIDEN OPPORTUNITIES FUND - Series
EDELWEISS - MAIDEN OPPORTUNITIES FUND - Series
EDELWEISS MAIDEN OPPORTUNITIES FUND – Series 1 (A close ended equity scheme investing across large, mid and small cap stocks) Investing in India’s Prospective Opportunities 1 “When was the last time, when you did something for the first time” NFO Period – February 2, 2018 to February 16, 2018
Robust Capital Supply EPFO expected to increase equity allocation Individuals are shifting from physical assets to financial assets There are structural tailwinds to IPO market activity Robust Capital S EPFO expected t Individuals are s financial assets Stable & Pro-business Govt.
GST, RERA, AADHAR, IBC among few key reforms Increased confidence to invest in India Strong IPO market; IPOs of INR 1,00,000+ Cr in last 2yrs Pent-up Capital Demand Capital for growth PE exits Subsidiary listing by conglomerates to unlock value PSU divestments Strong GDP Growth India is amongst the fastest growing economies Generating high interest among FIIs & DIIs to invest 2
IPO Market activity has picked up in recent years Robust IPO activity has created multiple maiden investment opportunities Companies from 18 different sectors have raised funds in FYTD-18 IPOs contribution to market-cap at 7 year high 0.5 1 1.5 2 2.5 3 3.5 50 100 150 FY12 FY13 FY14 FY15 FY16 FY17 FY18* % of Market-cap INR tn. India market Cap (INR Tn) Contribution through new listing (RHS) Source: Capitaline. IPO Activity data till 15th Dec 2017. *FY18 till December 2017. Fund raising includes IPO, FPO, QIPs and SMEs 33,946 18,340 19,307 36,362 6,044 6,770 1,284 1,201 11,362 26,372 71,434 108 39 22 66 40 13 5 7 21 27 38 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * Amount Raised (Rs.
Cr.) No. of IPOs IPO Activity at decade high 3
and will continue to remain buoyant PE/VC Exits data source: Bloomberg. *Data till Nov 2017. PE/VC Investment data source: Bain PE database which includes real estate and infrastructure. PE – Private Equity, VC – Venture Capital 5 10 15 20 25 200 400 600 800 1000 1200 1400 2015 2016 2017* PE/VC Exits through IPOs Amount ($mn) No. of IPOs (RHS) IPOs have become a favoured route for PE/VC investors to exit, given the buoyancy of public markets and liquidity in the system. With large number of PE/VC still waiting to exit, IPO market is expected to remain buoyant.
200 400 600 800 1000 1200 5 10 15 20 25 2009 2010 2011 2012 2013 2014 2015 2016 PE/VC Investments in India Amount ($bn) Number of deals (RHS) India got massive PE/VC investments during 2010 to 2015 as capital raising through public market was difficult.
As IPO market has become active now, most PE/VC investors are planning their exits. 4
FII Participation in IPOs is aiding demand FII participation in primary market out-scores secondary market Institutional Fund Flows USD Bn FII Secondary FII Primary 2011 -0.13 -0.64 2012 22.47 2.13 2013 17.78 1.97 2014 14.07 2.09 2015 -0.18 3.45 2016 1.63 1.27 2017 1.37 6.96 FIIs are more active in primary market than in secondary market since 2015. Since CY15 FIIs have bought USD 2.82Bn in the secondary market while they deployed USD 11.68Bn via primary market Data till 15th Dec 2017. Source: Bloomberg 5
IPO investing has been rewarding BSE IPO Index has outperformed Nifty 500 TRI by 104% since the start of this bull cycle - Jan 2014 50 100 150 200 250 300 350 S&P BSE IPO Index Nifty 500 TRI Data till 15-Dec 2017.
Source: Bloomberg. Index rebased to 100. BSE IPO Index is PRI basis as TRI values are not available 203% 99% 6
ACCESS SELECTION POST LISTING GAINS ...remains key while investing in IPOs “Investing in tomorrow’s leader today is more critical than anything in investing” 7
POST LISTING opportunities are often missed Most investors exit immediately after listing while missing on gains which come through after that Quartile (1) Average Listing Day Gain (a) Average Gain in a Year from IPO Price (b) Top Quartile 49% 82% 2nd Quartile 13% 46% 3rd Quartile -5% 19% 4th Quartile -38% -44% Missed Opportunities (a-b) Companies go public when they have earnings momentum. Capturing this earnings momentum is what most investors miss by exiting on listing day.
A structured approach to evaluate and thorough research is a must to “Time the exit” and optimize post listing returns. Internal Analysis. Only for illustration purpose. 1) Includes all IPOs done from 01-Jan-11 to 31-Jul-17, Quartiles by Listing Day Gain 8
Company Listing Date Profit/Loss HDFC Standard Life Insurance Company Ltd Nov 17, 2017 33% Khadim India Limited Nov 14, 2017 -11% The New India Assurance Company Limited Nov 13, 2017 -31% Mahindra Logistics Limited Nov 10, 2017 1% Reliance Nippon Life Asset Management Ltd Nov 6, 2017 -1% General Insurance Corporation of India Oct 25, 2017 -15% Indian Energy Exchange Ltd Oct 23, 2017 -4% MAS Financial Services Ltd Oct 18, 2017 41% Godrej Agrovet Limited Oct 16, 2017 19% Prataap Snacks Limited Oct 5, 2017 43% SBI Life Insurance Company Ltd Oct 3, 2017 -3% ICICI Lombard General Insurance Company Ltd Sep 27, 2017 18% Capacit'e Infraprojects Limited Sep 25, 2017 57% Matrimony.com Limited Sep 21, 2017 -10% Bharat Road Network Limited Sep 18, 2017 -5% Dixon Technologies (India) Limited Sep 18, 2017 82% Apex Frozen Foods Ltd Sep 4, 2017 362% Cochin Shipyard Ltd Aug 11, 2017 25% Security and Intelligence Services (India) Ltd Aug 10, 2017 46% Right SELECTION is important Performance of recent IPOs shows that not all IPOs are investment worthy Data till 15-Dec 2017.
Source: Bloomberg. Total returns from issue price. The Company mentioned above is for illustration purposes only. The scheme may or may not hold the same in its portfolio. Past performance may or may not sustained in future. 9
A dedicated Fund can provide better ACCESS Exposure to recent IPOs through diversified equity funds is limited Company Returns No. of Funds Average Exposure Apex Frozen Foods 348% 4 1.78% CDSL 151% 34 1.55% Shankara Building Products 272% 14 1.26% Dixon Technologies 121% 37 1.25% Capacite Infraprojects 57% 41 1.23% Avenue Supermarts Ltd. 315% 59 0.97% A dedicated fund investing in recent IPOs provides better ACCESS and thereby maximising gains Returns Data till 12-Jan 2018. Exposure details as on month end in which the stock was listed on exchanges Source: Bloomberg. Total returns from issue price.
The Company mentioned above is for illustration purposes only. The scheme may or may not hold the same in its portfolio. Past performance may or may not sustained in future. 10
Edelweiss Maiden Opportunities Fund – Series 1 Presenting IPO Access Selection Post Listing Gains 11 “If you make the opportunity, you’ll be first in position to take advantage of it”
Investment Strategy Stock Selection Style Protection Profit Booking Best 20 – 30 ideas from recently listed and upcoming IPOs Multi-cap and Sector agnostic approach Endeavors to protect downside through put options Aims for systematic profit booking through dividend payouts* 12 *Dividend payout is subject to availability of distributable surplus and at the discretion of the Trustee.
Portfolio Construct Recently Listed Companies IPOs Hedging Rebalancing Upto 80% shall be invested in maiden ideas from recently listed companies Upto 15% will be invested in new IPOs to capture listing and future potential gains Upto 5% of the portfolio will be used to buy long dated put options to hedge market risk Systematic rebalancing of portfolio to ensure profit booking These are indicative levels and may change at fund managers discretion 13
- A Process Driven Approach to invest in recently listed companies Universe Selection Financial Analysis Qualitative Analysis Risk Management
- IPOs listed in the past 3 years with a issue size > 100cr
- Revenue Growth
- Earnings Growth
- Consistency of Growth
- Anchor Investors
- QIB Demand
- Management Quality
- Use of funds
- Marketcap Limits
- Eye on Liquidity
- 25% Sector Limit
- Valuation discipline for systematic exits A process driven approach helps in SELECTION of quality companies and systematic EXIT MANAGEMENT while maximizing overall returns 14
In-depth Company Analysis of upcoming IPOs Premised on SELECTING companies with fundamentally strong building blocks High discipline to maintain a HIGH MARGIN OF SAFETY in pricing, in order to ensure that value creation in company translates into investor returns PRICE / VALUE CONSIDERATIONS STRONG CORE FOUNDATION Pricing/Margin of Safety Market Leadership Position ROE, ROCE, EPS and Revenue Growth Long Term Business Fundamentals High Quality Promoter Theme Governance 15
Recently listed MAIDEN opportunities New sectors are being introduced offering unique opportunities to play India’s growth story g introduced offering unique opportunities to play India Companies from 18 different industries raised funds this year Diagnostics Insurance Staffing Solutions Stock Exchange & Depositories Asset Management Companies Retailing 16
Ample Maiden Opportunities Ahead List of Upcoming IPOs Prince Pipes & Fittings Ltd. Acme Solar Holdings Ltd. Hindustan Aeronautics Ltd. Seven Islands Shipping Ltd. Barbeque Nation Hospitality Ltd. IRCTC Ltd Rail Vikas Nigam Ltd Go Air Lemon Tree Hotels Bandhan Bank Reliance General Insurance Ltd Srei Equipment Finance Ltd Bharat Serum And Vaccines Ltd. Policy Bazar.Com GMR Airports National Stock Exchange ICICI Securities Lite Bite Foods Kalyan Jewelers 21 14 19 46 31 57 10 20 30 40 50 60 2012 2013 2014 2015 2016 2017 No. of New Fillings PE/VC exits and strong demand owing to financialisation of household savings will see increased number of IPOs in immediate future.
This will continue to create maiden investment opportunities. Data Source: SEBI and www.chittorgarh.com. The above is only for illustration purpose and is not recommendation to invest in any company. The Scheme may or may not invest in the companies mentioned above. 17
Why invest in Edelweiss Maiden Opportunities Fund – Series 1 Heightened IPO activity provides good investment opportunity SELECT best recently listed and upcoming IPOs through a process driven approach ACCESS to large number of IPOs with LIMITED Money Traditional Diversified Mutual Funds give limited exposures to IPOs Endeavours to protect downside through hedging and aims for systematic profit booking by declaring dividends* He SE AC Tra En bo 18 *Dividend payout is subject to availability of distributable surplus and at the discretion of the Trustee.
Fund Features NFO Period 2nd Feb 2018 to 16th Feb 2018 Maturity Date 28th June 2021 (In case the maturity date happens to be a non-Business Day, the immediately succeeding Business Day will be considered as the maturity date) MICR Cheques Till end of business hours on 15th Feb 2018 RTGS and Transfer Cheques Till end of business hours on 16th Feb 2018 Switches Switches from equity schemes and other schemes – 16th Feb 2018; Till cut off time (specified for switch outs in the source scheme) Plans and Options Direct and Regular Plan with Growth and Dividend Payout & Sweep Option Offer of units Rs.
10/- each during the New Fund Offer Period Minimum Application Amount Rs. 5,000/- (plus in multiple of Re. 10) Liquidity To be listed on exchange Fund Manager Bhavesh Jain and Bharat Lahoti Benchmark Nifty 500 Total Return Index 19
The Edelweiss Advantage “Synergy – The bonus that is achieved when things work together harmoniously” 20 “When you invest, you are buying a day when you don’t have to work”
Edelweiss Advantage Experience Multi-decade experience in capital markets Experience of different Market cycles Time tested & structured investment process 21
Disclaimer Disclaimer: The presentation is dated January 12, 2018 and has been prepared by Edelweiss Asset Management Limited (Edelweiss AMC) based on internal data, publicly available information and other sources believed to be reliable.
Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of explanation and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time.
Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The same should not be construed as investment advice to any party. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Neither Edelweiss Asset Management Limited (Edelweiss AMC) and Edelweiss Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use of this document.
Edelweiss Mutual Fund/AMC is not guaranteeing returns on investments made in this scheme. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. Past performance may not be sustained in the future.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 22