EDELWEISS MAIDEN OPPORTUNITIES FUND - Series 1 - Edelweiss Mutual Fund
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“When was the last time, when you did something for the first time”
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
NFO Period – February 2, 2018 to February 16, 2018
1
There are structural tailwinds to IPO market activity
Stable & Pro-business Govt.
GST, RERA, AADHAR, IBC among few key reforms
Increased confidence to invest in India
Pent-up Capital Demand Strong IPO Strong GDP Growth
Capital for growth market; India is amongst the fastest
PE exits IPOs of growing economies
Subsidiary listing by conglomerates INR 1,00,000+ Generating high interest among
to unlock value Cr in last 2yrs FIIs & DIIs to invest
PSU divestments
Robust Capital SSupply
EPFO expected tto increase equity allocation
Individuals are sshifting from physical assets to
financial assets
2
IPO Market activity has picked up in recent years
IPOs contribution to market-cap at 7 year high IPO Activity at decade high
150 3.5
3 71,434
108
% of Market-cap
100 2.5
INR tn.
2
1.5 66
50 1 39 40 38
0.5 22 21 27
0 0 13 7
5
FY12 FY13 FY14 FY15 FY16 FY17 FY18*
36,362
33,946
India market Cap (INR Tn)
Contribution through new listing (RHS) 26,372
18,340 19,307
11,362
Robust IPO activity has created multiple maiden 6,044 6,770
1,284 1,201
investment opportunities
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *
Companies from 18 different sectors have raised funds Amount Raised (Rs. Cr.) No. of IPOs
in FYTD-18
Source: Capitaline. IPO Activity data till 15th Dec 2017. *FY18 till December 2017. Fund raising includes IPO, FPO, QIPs and SMEs 3
…and will continue to remain buoyant
PE/VC Investments in India PE/VC Exits through IPOs
25 1200 1400 25
1000 1200
20 20
1000
800
15 800 15
600
10 600 10
400 400
5 5
200 200
0 0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2015 2016 2017*
Amount ($bn) Number of deals (RHS) Amount ($mn) No. of IPOs (RHS)
India got massive PE/VC investments during 2010 to IPOs have become a favoured route for PE/VC
2015 as capital raising through public market was investors to exit, given the buoyancy of public
difficult. markets and liquidity in the system.
As IPO market has become active now, most PE/VC With large number of PE/VC still waiting to exit, IPO
investors are planning their exits. market is expected 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
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 FIIs are more active in
primary market than in
2016 1.63 1.27 secondary market since
2017 1.37 6.96 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
350
203%
300
250
99%
200
150
100
50
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 6
“Investing in tomorrow’s leader today is more
critical than anything in investing” ACCESS
SELECTION POST
LISTING GAINS
...remains key while investing in IPOs
7
POST LISTING opportunities are often missed
Most investors exit immediately after listing while missing on gains which come through after that
Average Listing Day Average Gain in a Year
Quartile (1)
Gain (a) from IPO Price (b)
Top Quartile 49% 82%
Missed
2nd Quartile 13% 46% Opportunities
(a-b)
3rd Quartile -5% 19%
4th Quartile -38% -44%
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
Right SELECTION is important
Performance of recent IPOs shows that not all IPOs are investment worthy
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%
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
272% 14 1.26%
Products
Dixon Technologies 121% 37 1.25%
Capacite Infraprojects 57% 41 1.23%
Avenue Supermarts
315% 59 0.97%
Ltd.
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“If you make the opportunity, you’ll be first in position to take advantage of it”
Presenting
Edelweiss
Maiden Opportunities Fund – Series 1
IPO Access Selection Post Listing
Gains
11Investment Strategy
Stock Selection Best 20 – 30 ideas from recently listed and upcoming IPOs
Style Multi-cap and Sector agnostic approach
Protection Endeavors to protect downside through put options
Profit Booking Aims for systematic profit booking through dividend payouts*
*Dividend payout is subject to availability of distributable surplus and at the discretion of the Trustee. 12Portfolio Construct
Upto 80% shall be invested in maiden ideas
Recently Listed Companies
from recently listed companies
Upto 15% will be invested in new IPOs to
IPOs capture listing and future potential gains
Upto 5% of the portfolio will be used to buy long
Hedging dated put options to hedge market risk
Systematic rebalancing of portfolio to ensure profit
Rebalancing booking
These are indicative levels and may change at fund managers discretion 13A Process Driven Approach to invest in recently listed companies
Universe Financial Qualitative Risk
Selection Analysis Analysis Management
• IPOs listed in the • Revenue Growth • Anchor Investors • Marketcap Limits
past 3 years with a • Earnings Growth • QIB Demand • Eye on Liquidity
issue size > 100cr • ROE/ROIC • Management • 25% Sector Limit
• Consistency of Quality • Valuation discipline
Growth • Use of funds for systematic exits
A process driven approach helps in SELECTION of quality companies and systematic EXIT MANAGEMENT
while maximizing overall returns 14In-depth Company Analysis of upcoming IPOs
Premised on SELECTING companies with fundamentally strong building blocks
ROE, ROCE,
Market
Pricing/Margin Leadership EPS and
PRICE / VALUE CONSIDERATIONS
of Safety Position Revenue
Growth
Long Term High Quality
STRONG CORE FOUNDATION Business Promoter Governance
Fundamentals Theme
High discipline to maintain a HIGH MARGIN OF SAFETY in pricing, in order to ensure that value creation in company
translates into investor returns 15Recently listed MAIDEN opportunities
New sectors are beingg introduced offering unique opportunities to play India’s
India growth story
Diagnostics
Insurance
Staffing Solutions
Asset Management
Companies
Stock Exchange &
Depositories
Retailing
Companies from 18 different industries raised funds this year 16Ample Maiden Opportunities Ahead
List of Upcoming IPOs
Prince Pipes & Fittings Ltd.
Acme Solar Holdings Ltd. No. of New Fillings
Hindustan Aeronautics Ltd. 57
60
Seven Islands Shipping Ltd. 46
50
Barbeque Nation Hospitality Ltd.
40
IRCTC Ltd 31
30
Rail Vikas Nigam Ltd 21 19
Go Air 20 14
Lemon Tree Hotels 10
Bandhan Bank 0
Reliance General Insurance Ltd 2012 2013 2014 2015 2016 2017
Srei Equipment Finance Ltd
Bharat Serum And Vaccines Ltd.
Policy Bazar.Com
PE/VC exits and strong demand owing to financialisation of household
GMR Airports
National Stock Exchange savings will see increased number of IPOs in immediate future.
ICICI Securities
This will continue to create maiden investment opportunities.
Lite Bite Foods
Kalyan Jewelers
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. 17Why invest in Edelweiss Maiden Opportunities Fund – Series 1
Heightened IPO activity provides good investment opportunity
He
SELECT best recently listed and upcoming IPOs through a process driven approach
SE
ACCESS to large number of IPOs with LIMITED Money
AC
Traditional Diversified Mutual Funds give limited exposures to IPOs
Tra
En
Endeavours to protect downside through hedging and aims for systematic profit
bo
booking by declaring dividends*
*Dividend payout is subject to availability of distributable surplus and at the discretion of the Trustee.
18Fund 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 Rs. 5,000/- (plus in multiple of Re. 10)
Amount
Liquidity To be listed on exchange
Fund Manager Bhavesh Jain and Bharat Lahoti
Benchmark Nifty 500 Total Return Index
19“When you invest, you are buying a day when you
don’t have to work”
The Edelweiss
Advantage
“Synergy – The bonus that is achieved when things work
together harmoniously”
20Edelweiss Advantage
Multi-decade Experience Time tested
experience in of different & structured
Experience capital Market investment
markets cycles process
21Disclaimer
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. 2223
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