Ambit Seeks to Raise $150 Million for India-Focused Hedge Fund

  • Firm to benefit from new rules allowing foreign investors
  • Bullish on private banks, consumer discretionary shares

Ambit Investment Advisors, a Mumbai-based joint-venture with Nikko Asset Management, is seeking to raise $150 million by the middle of next year for an India-focused hedge fund, as the industry opens up to foreign investors.

The long-short fund, which will invest solely in Indian equities, will start in May, Vaibhav Sanghavi, managing director and portfolio manager, said in a telephone interview from Mumbai. The fund will generally aim to hold 30 to 35 long positions and 20 short positions in shares that it expects to decline, said Sanghavi, who will manage the fund. The fund will begin trading with domestic investors’ money before opening up to global investors.

The Reserve Bank of India in November passed rules allowing Indian hedge funds, which historically could only take money from domestic institutions and wealthy individuals, to accept assets from foreign institutions. Sanghavi said he will begin meeting with global investors later this year and aims to increase the firm’s assets to $500 million by the middle of 2017.

Sanghavi manages the firm’s existing Ambit Alpha Fund, a $140 million India-focused long-short strategy, which is up 0.89 percent so far this year amid losses in the nation’s benchmark, and has returned an annualized return of 20 percent since its June 2013 inception.

Unlike Ambit Alpha, the new pool will focus on what it calls "beta," or investments that seek to produce returns in line with a benchmark.

Ambit is bullish on shares of private banks, which are poised to benefit from growth "on the back of strong balance sheets, cleaner books and professional management," Sanghavi said. The firm is also positive on the prospects for consumer-discretionary companies, including makers of two-wheeler scooters and paints, sectors that should benefit as the nation’s growing middle class spends more, he said.

Ambit is bearish on shares of telecommunications, utilities and industrial companies, as competition in these areas are very high, Sanghavi said, declining to name companies the fund is shorting.

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