Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
SEBI has permitted the product, at least for now, with stringent requirements that only close-ended funds will be allowed to be launched, units will have to be compulsorily listed on the stock exchanges and an NAV (net asset value) of the scheme must be declared daily.
Further, SEBI announced that REMFs would be obligated to appoint a custodian. The custodian would be the repository of titles of real estate properties held by the REMFs. Real estate mututal funds have been permitted to invest 1) directly in real estate properties within India, (2) mortgage (housing-lease) backed securities (3) equity shares/ bonds/ debentures of listed/ unlisted companies which deal in properties and also undertake property development and in (4) other securities. This gives them a fairly broad mandate.
At the same meeting SEBI gave a fillip to the private equity industry exempting it from lock in requirements on shares allotted to them prior to IPOs subject to some restrictions. Specifically, SEBI stipulated that ôthe shareholding of Venture Capital Funds (VCFs) and Foreign Venture Capital Investors (FCVIs) held in a company prior to making an Initial Public Offering (IPO), would be exempt from lock-in requirements only if the shares are held by them for a period of at least one year at the time of filing of draft prospectus with SEBI.ö
SEBI clarified that the intent behind the relaxation was to ensure that financial investors who had participated in the long term growth of the investee company were free to trade their shares immediately on listing.
With demand for quality real estate in India far exceeding supply and the economy on a growth trajectory real estate prices in India are booming. A number of players have already forayed into the real estate fund management space in the country but given the restrictions have had to restrict their investor base to corporates, banks, insurance companies and high net worth individuals. Pantaloon-backed Future Capital closed its second real estate fund, Horizon in April this year raising $263 million for retail-led development. HDFC Property Fund, structured as a venture capital company with minimum investment of Rs50 million ($1.1 million), garnered immense investor interest. Hopefully now retail and small investors will be able to join the party. Certainly, the floodgates are now open for a number of international players who have been eagerly awaiting this relaxation.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains
Already on the rise pre-Covid, investments into data centre assets in Asia have accelerated in the past year, fuelled by interest from investors across the spectrum.
Actively managed funds were also not found to have better odds of higher returns than more passive funds.