excel - almondz wealth 2018.pdf · 2018-05-01 · karvy stock broking . • he is the founder of...

EXCEL THE INCOME PORTFOLIO

Private & Confidential | 2

TABLE OF CONTENTS

KARVY GROUP 3 1

CURRENT DEBT MARKET SCENARIO 2 7

EXCEL OVERVIEW 3 16

Page No.

KARVY GROUP Premier Integrated Financial Services Provider

Private & Confidential |

About Karvy Group

4

• Karvy Group is a premier integrated financial services provider, ranked among the Top-5 in

the country across its business segments with high reputation and financial strength

• Member of BSE, NSE, MCX, NCDX, MCX-SX and registered with NSDL, CDSL ,RBI and SEBI

2100+ Unique

Touch Points

>80% ET 500

Companies Served

467 Branches

30+ Years in Financial

Services

• Equity & Commodity Broking

• Depository Participant

• Distribution of Financial Products

• Forex & Currencies

• Wealth Management

• NBFC

• Realty Services

• Registry Services for Corporate

• Investment Advisory

• Insurance Repository

• Portfolio Management

• Merchant Banking

Service Offerings

Marquee Base Of Investors

Business Overview

1167 Franchisees


History of Over 3 Decades in Indian Market

5

>2016

1985: • Company

incorporated • Launched

Registry services

1990: • Entered into financial

product distribution • Retail broking with

Hyderabad Stock Exchange

1995: • Fund investment by

Jardine Fleming • Started merchant

banking • Member of NSE-

Cash segment

1997-99: • Registered as

Depository Participant with NSDL & CDSL

2001: • Member of NSE-

Derivative segment • Started Equity Research

2003-04: • Induction of

Computershare Australia as a JV Partner

• Forayed into Institutional, Debt Market & Commodity broking

2005: • Private Equity

Investment by PCG of USD 19Mn in Karvy Stock Broking

• Forayed into Insurance broking

2007-08:

• Investment by ICICI Venture and Baring Asia for USD 110Mn

• Entered into Realty Services, Online Broking and Forex Derivatives

2009:

• Launched Data Management , PMS, NBFC & Wealth Management services

2013:

• Set-up of Insurance repository

2014-16:

• Initiated Analytics & Market research

1985 2000 2010


Unrivalled Reach and Healthy Assets Under Management

6

Orissa 14 l 43

Other States 71 l 183

Tamil Nadu & Pondicherry 48 l 70

Maharashtra 56l 177

Punjab 12 l 38

Karnataka & Goa 48 l 74

Madhya Pradesh 22 l 36

Gujarat 37 l 59

Kerala 20 l 56

Rajasthan & Delhi 31l 63

Telangana 20 l 27

Uttar Pradesh 46 l 174

Andhra Pradesh 21 l 67

BA Branches

West Bengal 25 l 60

Branches & Franchisees Assets Under Management (AUM)*

60%

27%

13%

NCD Placement Debt PMS Equity PMS

INR 1500 Cr

Note 1) * The Karvy Group has 3 PMS licenses. The given AUM represents the aggregate of the 3 businesses.

CURRENT DEBT MARKET SCENARIO Growing Demand and Attractive Returns


Improving Regulatory Framework

Stable Currency Markets

Improving Fiscal Position with Strong Forex Reserves

Stable Inflation Regime with Downward Bias

Robust Macro Fundamentals with Growing Uptrend

Market Ripe for a Healthy Bond Market

3

1

4

5

2

>7% GDP Growth Rate 1

4% Inflation Rate 2

16.50% of GDP 3

INR / $ - 64-67 Range 4

Insolvency & Bankruptcy Code, 2016

8

Notes: (1) World Bank Indicators Database, 2017 (2) RBI Inflation Targeting – Urjit Patel Committee, 2014 (3) IMF, RBI Weekly Statistical Supplement, Dec 2017 (4) www.moneycontrol.com


Significant Global Interest in Indian Bond Market

PTI – “RBI Raises Foreign Investment Limit in Bond Market”

ET BUREAU - “Exuberance in Debt Market”

BLOOMBERG- “India’s Corporate Bond Market Heats Up”

REDIFF – “FPI Renew Interest in Indian Bonds”


Huge Potential in Indian Debt Market

7%

30% 32% 32% 39%

47%

80%

chile India China UK Singapore USA Italy

Public Bond Market Capitalisation as % of GDP

Source: SEBI, BIS, Cbonds

10

Private Bond Market Capitalisation as % of GDP

4% 15% 16% 16%

89%

130%

India Singapore China UK Spain USA

Source: SEBI, BIS, Cbonds

Source: (1) Calculated using BIS Statistics for Debt Securities Issues & Amounts outstanding, SEBI Outstanding Corporate Bonds Data and http://cbonds.com/countries/


Growing Debt Market with Attractive Returns

71.3 81.4

92.0 101.6

FY 13 FY 14 FY 15 FY 16

Cumulative Debt Outstanding (Rs. Lakhs Crores)

Source: Department of Economic Affairs

Repo Rate & Sovereign Yield Bond Return & Sovereign Yield

7.5% 7.5%

6.0%

8.2% 8.0%

7.1%

FY 13 FY 14 FY 15 FY 16 FY 17

Repo Rate* Sovereign Yield^

Source: Monetary Policy of India, Bloomberg

11.5%

15.0%

10.6%

8.2% 8.0% 6.7%

FY 13 FY 14 FY 15 FY 16 FY 17

AAA Rated Bonds** Sovereign Yield^

Source: Bloomberg, NSE India

11

Notes: (1) * Repo Rate as on Dec 08, 2017 (2) ^ 10 Years Government Bond Yield as on Dec 01, 2017 (3) ** Bond Return based on NIFTY Corporate Bond Index as on Oct 03, 2017


However, Banks Are Constrained To Fund…

High NPAs Equity Gap

Public Sector Banks while being recapitalized by Rs 2.11 lakh crore1 would be able to grow their credit by only 10% -15% post adjusting for provisions and write-offs

Poor Profitability has led to limited to fund generation from internal accruals

Difficult to raise capital from outside sources due to weak operating performance

Banks are currently facing Rs. 8,29,3382 crore of NPAs and will only see higher provisioning going forward

Excess supply in sectors like Steel, Real estate etc can further aggravate the situation

RBI has become more vigilant & forcing banks to make aggressive provision in riskier loans

12

Infrastructure sector alone would need more than Rs 50 lakh crore3 by 2022 to fund the capital expenditure

Source: (1) http://www.thehindu.com/todays-paper/rs-211-lakh-crore-for-psu-banks-to-boost-lending/article19915075.ece (2) NPAs in Banks (June 2017) & CARE (Aug 2017) (3) http://www.thehindu.com/business/india-has-to-spend-50-lakh-cr-on-infra/article19926836.ece


…Leading to Growing Interest in Corporate Bonds

1,733 2,188

3,615 4,041

6,407

1,041 1,404

2,489 2,611

3,377

FY 09 FY 11 FY 13 FY 15 FY 17 -500.0

500.0

1,500.0

2,500.0

3,500.0

4,500.0

5,500.0

6,500.0

7,500.0

8,500.0

9,500.0

Amount Raised (Rs. Billion) No of Issues (Nos)

Private Placement of Corporate Bonds In last Eight Years, Private Placement of Corporate Bonds witnessed 270% growth in term of amount raised

270% Growth

Amount raised via Private Placement of Corporates Bonds rose 40% to Rs. 6,400 billion in Financial Year 2017 against Rs. 4,041 billion in Financial Years 2016

Number of Private Placement issues increase by 240% during 2009 and 2017

240% Growth

13

Source: http://www.sebi.gov.in/statistics/corporate-bonds/privateplacementdata.html


Significant Interest Among Borrowers Due to..

• Customised solutions needed to address industry or business requirements compared to standardized solutions offered by banks

• Funding needed for specific purposes like Acquisitions, PE Exits which are generally not given by Banks

• Faster deal closure in relation to Banks which take inordinate time due to credit logjam

Corporates

• Market prefers very safe AA and above rated assets, resulting in a thin market for lower rated bonds

• Consequently, SMEs have been excluded from the debt market, as they are generally rated between AA and BBB

• Marginal activity in the secondary market as most of the volumes dominated by a few large issuances by PSUs and banks

Gaps we see in the market

14

Source: Karvy Capital Structured Finance Desk


INR 25 Lakhs Minimum Investment

>3 Years Ideal Investment Horizon

15

Our Solution: Excel, a Mid-Yield Debt Product

Strategy Risk Profile Low Moderate High

Low to Moderate

Benchmark S&P BSE India Bond Index

Targeted Yield 6 – 8% higher than 5-yr SBI FD Rate*

• Non-Convertible Debentures

• Preference Capital

• Corporate Bonds

• Commercial Paper

• Securitized Debt

Portfolio Mix

Note: (1) * Excel is a moderate risk instrument compared to bank FD and thus returns may be higher compared to the same

EXCEL OVERVIEW Mid-Yield Debt PMS


Strategy Highlights: Excel

17

Excel PMS strives to prioritize income over capital appreciation by investing in companies with credit rating of investment grade and above only.

• Higher Yield compared

to Bank Fixed Deposit

• Scheduled Cash Flows* • Diversified

KEY FEATURES^

• Investor seeking to hold

a debt portfolio with low to moderate risk appetite

• Investors expecting a moderate return over a long term horizon

IDEAL FOR • 6 – 8% more than the

rate of interest of the 5-yr FD offered by the SBI

TARGET YIELD^

Notes: (1)*Refers to cash corporate benefits paid out by Company whose debt instrument the portfolio is subscribed to (2) ^ Excel is a moderate risk instrument compared to bank FD and thus returns may be higher compared to the same. To view weighted average returns of the portfolio, kindly refer the Disclosure Document. Performance is net of transaction costs and before management fees. Past performance may or may not be sustained in future. Returns of individual clients may vary depending on time of entry.


Leading Through Strong Management

18

Punita Sood Sohal Deputy General Manager

• 20+ years of experience in Financial Services

• Expertise in Structuring and Investment Structuring Activities and has advised on various complex structuring transactions in individual capacity

• Qualified Engineer & MBA

Santosh Natrajan Deputy General Manager

• 10+ years of experience in credit analysis of SMEs & Corporate with a strong background in credit underwriting and credit ratings

• Evaluated innumerable SMEs in his previous roles in a Leading Private Bank and Credit Rating Agency

• Chartered Accountant and M.Com from Mumbai University

Phani Sekhar Ponangi Fund Manager

• 13+ years of experience in Indian Markets on sell and buy side debt and equity

• Previously, worked as Fund Manager for Angel Broking and managed Equity Midcap and Large-cap Portfolio for 8 years with stellar returns for investors

• Holds the CFA and CAIA charters

• MBA in Finance and BE in Mechanical Engineering

Kedar Deshpande Director

• Kedar has been serving as Director since 2015. Prior to this, he was country head for Karvy Stock Broking .

• He is the founder of Repeat Purchase India Pvt Ltd & Financial Catalysts Pvt Ltd

• He has set up Edelweiss Broking retail business. Prior to that he worked as retail business head of ICICIDirect.com

• MBA from Pune University


Our Investment Philosophy

19

Cash Flow based Repayments

Avoid Keyman Risk

Preference for

businesses with

sound

professional

management

High Corporate Governance

Top priority while

investing

Higher Return on Equity

Growing profit &

sustainable ROE

Sector Agnostic Investment Philosophy with a Focus on Growing Companies with a Profitable Track Record

Ensures regular

servicing


Structure of Instruments

20

EXCEL

Non-Convertible Debentures: Offers High to Mid yield (pre - tax)

Preference Capital: Ideal for Investors in the Highest Marginal Bracket because of Post Tax Yield nature

Commercial Paper: Debt instruments with maturity of less than one year

Pass Through Certificates: Securitized Debt

Corporate Bonds: Debt instruments with maturity of at least one year

Tax Free Bonds: Yield is exempted from tax


Company Analysis

Analysis of Financials &

Business Plan

Legal Documentation

Review & Financial Due Diligence

Risk Analysis & Mitigation

Final

Offer

Creation

Due Diligence By Structured Finance Desk

• Credible Management

• Professional Board

• Cash Flows • ROE > Cost of

Borrowing

• Escrow of Cash Flows

• Share Pledge/ Fixed Asset Cover

• Review by Core Committee

• Financial Due Diligence by an external CA Firm

• Done by Independent External Legal Firm

Source: Independent Agencies


Excel Ranks Higher on All Parameters…

22

Available** Available* Available*

Moderate Lowest Lower

Restricted No Diversification

Debt, Pref Cap, Securitized Debt

NA Limited (Gov. Securities & Corporate Bonds)

Available^ NA NA

Multiple Industries

Liquidity

Returns

Diversification

Periodic Payout

Instruments

Excel# Debt Mutual Fund Fixed Deposit

Notes: (1) * Subject to exit load (2) **Subject to exit load and regular servicing of obligations by the Investee Company (3) ^ Refers to cash corporate benefits paid out by Company whose debt instrument the portfolio is subscribed to (4) # Excel is a moderate risk instrument as compared to a Bank FD and thus returns compared to the same may be higher (5) These are the views of Karvy Capital Limited.


…Based on Options v/s Opportunities

23

Bank Fixed

Deposit

Debt Mutual

Fund

EXCEL

5% - 7% 8% - 11% 12%-14%

Low

Medium

High

Pre-tax Returns*

Ris

k

Notes: (1) * This is the XIRR. To view weighted average returns, please refer to the Disclosure Document. Performance is net of transaction costs and before management fees. Past performance may or may not be sustained in future. Returns of individual clients may vary depending on time of entry. (2) Excel is a moderate risk instrument as compared to Bank FD and thus returns compared to the same may be higher.


Fixed

Management

Fees

1.25 % p.a. Quarterly/ Monthly ~

Daily Average NAV of the Portfolio ^

Placement

Fees Upto 2.5 % On each corpus infusion Corpus

Exit Load

3% in 1st Year, 2% in 2nd Year, 1% in 3rd Year

& NIL thereafter

On Exit NAV of the Portfolio^

Transparent Fee Structure

24

Charges Frequency Base

Notes: (1) All charges are exclusive of GST. These charges are stated as an example. Actual charges will be levied as per agreement between client and portfolio manager at time of opting for PMS . For details of other charges levied on actual, refer the Disclosure Document. (2) ~ as agreed with the client. (3) ^ Inclusive of all securities and cash/ bank balances.


Arohan Financial Services Pvt. Ltd.

Current Investment Portfolio

Annapurna Microfinance Pvt. Ltd.

Belstar Investment & Finance Pvt. Ltd.

• Kolkata based microfinance company and founded in 2016.

• Offers a wide range of financial services to empower the underserved in West Bengal, Assam, Bihar, Jharkhand, and Odisha.

• Microfinance venture of People’s Forum, a development organisation that is more than two decades old.

• In 2007, People’s Forum segregated its microfinance activity from its developmental activities and created an independent project, Mission Annapurna.

• Founded in 1988, Tamil Nadu based NBFC provides microfinance service.

• Offers collateral-free loans and insurance services to entrepreneurs.

Spandana Sphoorty Financial Ltd.

• Incorporated in 2003, Hyderabad based NBFC providing microfinance services.

• Provides loans to women of low-income households throughout India for expansion and sustainability purpose.

Note: Investments are subject to change in decision of the Investment Committee


Disclaimer

26

Karvy Capital Limited (Karvy), a wholly owned subsidiary of Karvy Stock Broking Limited, is an Investment NBFC registered with the RBI and also acts as Sponsor and Manager to Karvy Capital Alternative Investment Fund (Trust)apart from being a SEBI registered portfolio manager bearing registration number INP000004524.The information and views presented here, pertaining to the portfolio management services[PMS] offered by Karvy Capital Limited [Karvy] are prepared by Karvy and are subject to change without any notice. Also there are references to data collected from third parties, public sources and sources believed to be reliable but no independent verification has been made nor is its accuracy or completeness guaranteed. This presentation and information herein is solely for informational purpose and may not be used or considered as an offer document or invitation or solicitation of any kind to subscribe or to use PMS offered by Karvy and is not intended to create any rights or obligations. This presentation and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of Karvy. Past performance is not necessarily a guide to future performance. Karvy and its Group companies or any person connected with it accepts no liability whatsoever for the content of this presentation or for the consequences of any actions taken on the basis of the information provided therein or for any loss or damage of any kind arising out of the use of this presentation. Karvy and its affiliates, officers, directors, and employees worldwide may from time to time, be engaged in any other transaction involving such securities/commodities and earn brokerage or other compensation or act as a market maker in the securities/commodities discussed herein or have other potential conflict of interest with respect to any recommendation and related information and opinions. Karvy operates from within India and is subject to Indian regulations. This presentation is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Karvy or its affiliates to any registration or licensing requirement within such jurisdiction. Certain category of investors in certain jurisdictions may or may not be eligible to avail the PMS offered by Karvy as mentioned in this presentation. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Nothing in this presentation constitutes investment, legal, accounting and tax advice or a representation that is suitable or appropriate to your specific circumstances. The information given in this document on tax is for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. While we would endeavor to update the information herein on reasonable basis, Karvy, its associated companies, their directors and employees (“Karvy Group”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Karvy from doing so. Karvy will not treat recipients as customers by virtue of their receiving this brochure. The PMS discussed and opinions expressed in this presentation may not be suitable for all recipients, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Persons interested in availing the portfolio management services from Karvy are advised to read and understand the Disclosure Document and its annexures and other documents provided by Karvy to get acquainted with the terms and conditions of the offering and the risks associated therein prior to availing the said service. Except for the historical information contained herein, statements in this presentation which contain words or phrases such as 'will', 'expected to', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Karvy’s proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Karvy Group may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this document.


Contact Details

27

Karvy Capital Limited 702, Hallmark Business Plaza, Sant Dnyaneshwar, Bandra (East), Mumbai - 400 051 Tel: +91 22 6149 1500 Fax: +91 22 3305 5033 Email: [email protected]

Registration Nos SEBI: INP000004524 I AIF: IN/AIF 3/13-14/0045 I NBFC: B-13.00462

Punita Sood Email: [email protected] Contact No.: +91 22 6149 1678

excel - almondz wealth 2018.pdf · 2018-05-01 · karvy stock broking . • he is the founder of...

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