Religare-Invesco targets offshore market

The firm is launching a feeder fund into its JV partner’s pan-European equity fund, while its is also focusing on sub-advisory for pending India-focused Invesco products internationally.
Religare-Invesco targets offshore market

Indian firm Religare Invesco Asset Management is set to launch its first fund-of-funds this week feeding into a pan-European equity fund of its joint-venture partner.

Religare Invesco’s CEO, Saurabh Nanavati, tells AsianInvestor the $2.2 billion fund house will be advancing a two-pronged global strategy this year: promoting its Indian expertise overseas as well as Invesco’s global capabilities in the domestic market.

“Our team has spent much of last year building the brand name and getting onto global distributors’ platform,” he says. “This year the joint venture will be more focused on launching products – both selling Indian products offshore and getting Invesco’s global products into India.

“With new parent Invesco we are working more proactively to sell Indian products into the global market, which was one of the main reasons why Invesco chose to invest in our firm in 2012, apart from developing the Invesco brand in local Indian markets.”

Invesco’s acquisition of 49% stake in Religare Asset Management was completed in May 2013, as reported. AsianInvestor had previously reported on what Invesco had bought into in India.

Prior to that purchase, when it came to its global approach Religare had raised assets from Hong Kong, Singapore and Japan independently to feed into its Indian funds.

Now Religare Invesco AM’s 17-strong investment management team – 11 focused on equities, six on fixed income – will progressively become more active on sub-advisory, confirms Nanavati.

Invesco is understood to be readying an India-focused bond fund domiciled in Luxembourg and available for sale internationally including Hong Kong, pending regulatory approval.

The need to tap the international investor base is seen as a key revenue generator for Indian fund houses, given the challenge of selling mutual funds in the domestic marketplace.

Mutual fund contribution to household financial savings in India contracted -1.1% in the 12 months to end-June 2012, from 3.3% in 2010, according to the Reserve Bank of India.

Redemptions and capital losses were cited as the cause. While RBI estimates this will return to 2.5% by June 2013, that is still down in percentage terms on 2010.

Part of the challenge has been getting Indian retail investors to trust equities again after the financial crisis. They parked more than 50% of savings into bank deposits between 2010 and 2013, and today only 0.3% of their savings – estimated at $200 billion – is invested directly in Indian equities.

“In the majority of cases equity is non-existent in retail investors’ personal investment,” says Nanavati. “That the trend has to reverse at some point in the near future.”

He confirms that while Religare-Invesco is not yet bottom-line positive, it had achieved break-even at the operational income level when it was acquired in 2012.

This week Religare Invesco AM will launch its first fund of funds feeding into an Invesco pan-European equity fund.

In India, feeder FoFs investing into offshore funds represent less than 1% of industry asset under management, which stood at $133 billion as at the end of December 2013, according to the Association of Mutual Funds in India.

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