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 Capital for growth PE exits Subsidiary listing by conglomerates to unlock value PSU divestments Strong IPO market; IPOs of INR 1,00,000+ Cr in last 2yrs Strong GDP Growth India is amongst the fastest growing economies Generating high interest among FIIs & DIIs to invest Robust Capital Supply EPFO expected to increase equity allocation Individuals are shifting 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 INR tn. 150 100 50 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18* India market Cap (INR Tn) 3.5 3 2.5 2 1.5 1 0.5 0 % of Market-cap 108 33,946 39 22 66 36,362 40 13 5 7 21 27 71,434 38 Contribution through new listing (RHS) 26,372 18,340 19,307 Robust IPO activity has created multiple maiden investment opportunities Companies from 18 different sectors have raised funds in FYTD-18 11,362 6,044 6,770 1,284 1,201 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * Amount Raised (Rs. Cr.) No. of IPOs Source: Capitaline. IPO Activity data till 15 th 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 20 15 10 5 1200 1000 800 600 400 200 1400 1200 1000 800 600 400 200 25 20 15 10 5 0 2009 2010 2011 2012 2013 2014 2015 2016 0 0 2015 2016 2017* 0 Amount ($bn) Number of deals (RHS) Amount ($mn) No. of IPOs (RHS) India got massive PE/VC investments during 2010 to 2015 as capital raising through public market was difficult. As IPO market has become active now, most PE/VC investors are planning their exits. IPOs have become a favoured route for PE/VC investors to exit, given the buoyancy of public markets and liquidity in the system. With large number of PE/VC still waiting to exit, IPO 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 2016 1.63 1.27 2017 1.37 6.96 FIIs are more active in primary market than in secondary market since 2015. Since CY15 FIIs have bought USD 2.82Bn in the secondary market while they deployed USD 11.68Bn via primary market Data till 15 th 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 350 300 203% 250 200 99% 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 Quartile (1) Average Listing Day Gain (a) Average Gain in a Year from IPO Price (b) Top Quartile 49% 82% 2 nd Quartile 13% 46% 3 rd Quartile -5% 19% 4 th Quartile -38% -44% Missed Opportunities (a-b) 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 Products 272% 14 1.26% Dixon Technologies 121% 37 1.25% Capacite Infraprojects 57% 41 1.23% Avenue Supermarts Ltd. 315% 59 0.97% 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 11
Investment 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. 12
Portfolio Construct Recently Listed Companies Upto 80% shall be invested in maiden ideas from recently listed companies IPOs Upto 15% will be invested in new IPOs to capture listing and future potential gains Hedging Upto 5% of the portfolio will be used to buy long dated put options to hedge market risk Rebalancing Systematic rebalancing of portfolio to ensure profit booking These are indicative levels and may change at fund managers discretion 13
A Process Driven Approach to invest in recently listed companies Universe Selection Financial Analysis Qualitative Analysis Risk Management IPOs listed in the past 3 years with a issue size > 100cr Revenue Growth Earnings Growth ROE/ROIC Consistency of Growth Anchor Investors QIB Demand Management Quality Use of funds Marketcap Limits Eye on Liquidity 25% Sector Limit Valuation discipline for systematic exits A process driven approach helps in SELECTION of quality companies and systematic EXIT MANAGEMENT while maximizing overall returns 14
In-depth Company Analysis of upcoming IPOs Premised on SELECTING companies with fundamentally strong building blocks PRICE / VALUE CONSIDERATIONS Pricing/Margin of Safety Market Leadership Position ROE, ROCE, EPS and Revenue Growth STRONG CORE FOUNDATION Long Term Business Fundamentals High Quality Promoter Theme Governance High discipline to maintain a HIGH MARGIN OF SAFETY in pricing, in order to ensure that value creation in company translates into investor returns 15
Recently listed MAIDEN opportunities New sectors are being introduced offering unique opportunities to play India s growth story Insurance Diagnostics Asset Management Companies Staffing Solutions Retailing Stock Exchange & Depositories Companies from 18 different industries raised funds this year 16
Ample Maiden Opportunities Ahead List of Upcoming IPOs Prince Pipes & Fittings Ltd. Acme Solar Holdings Ltd. Hindustan Aeronautics Ltd. Seven Islands Shipping Ltd. Barbeque Nation Hospitality Ltd. IRCTC Ltd Rail Vikas Nigam Ltd Go Air Lemon Tree Hotels Bandhan Bank Reliance General Insurance Ltd Srei Equipment Finance Ltd Bharat Serum And Vaccines Ltd. Policy Bazar.Com GMR Airports National Stock Exchange ICICI Securities Lite Bite Foods Kalyan Jewelers No. of New Fillings 57 60 50 46 40 31 30 21 19 20 14 10 0 2012 2013 2014 2015 2016 2017 PE/VC exits and strong demand owing to financialisation of household savings will see increased number of IPOs in immediate future. This will continue to create maiden investment opportunities. 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. 17
Why invest in Edelweiss Maiden Opportunities Fund Series 1 Heightened IPO activity provides good investment opportunity SELECT best recently listed and upcoming IPOs through a process driven approach ACCESS to large number of IPOs with LIMITED Money Traditional Diversified Mutual Funds give limited exposures to IPOs Endeavours to protect downside through hedging and aims for systematic profit booking by declaring dividends* *Dividend payout is subject to availability of distributable surplus and at the discretion of the Trustee. 18
Fund Features NFO Period 2 nd Feb 2018 to 16 th Feb 2018 Maturity Date 28 th 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 15 th Feb 2018 RTGS and Transfer Cheques Till end of business hours on 16 th Feb 2018 Switches Plans and Options Offer of units Minimum Application Amount Liquidity Fund Manager Benchmark Switches from equity schemes and other schemes 16 th Feb 2018; Till cut off time (specified for switch outs in the source scheme) Direct and Regular Plan with Growth and Dividend Payout & Sweep Option Rs. 10/- each during the New Fund Offer Period Rs. 5,000/- (plus in multiple of Re. 10) To be listed on exchange Bhavesh Jain and Bharat Lahoti 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 20
Edelweiss Advantage Experience Multi-decade experience in capital markets Experience of different Market cycles Time tested & structured investment process 21
Disclaimer 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. 22
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