Why Prashant Khemka is worked up about returning to MFs

But that isn’t the one cause for Khemka’s exuberance. It has extra to do together with his ardour for and long-time affiliation with mutual funds (MF). In 2006, he grabbed the chance to go Goldman Sachs asset administration enterprise in India. That was a very long time in the past, and Goldman Sachs has additionally exited its Indian enterprise, promoting it to Reliance Capital in 2015. But, Khemka is again within the saddle, this time with WhiteOak Capital, which he based in Singapore in 2017. His agency even secured approval from market regulator Sebi final yr to launch a MF scheme for Indian retail traders

As of now, WhiteOak Capital caters to overseas traders by way of its offshore funds and India’s high-net value traders (HNIs) through its portfolio administration providers (PMS) and alternate funding funds (AIFs).Overall, it manages $5.9 billion ( ₹48,000 crore) value of property. Of this, 69% is offshore cash (investments made by overseas traders in Indian shares). More on that later.

Early life

Khemka, 51, attributes his fascination for the inventory markets to his humble beginnings . He was introduced up in a middle-class Marwari family within the Mumbai suburb of Andheri, the place his father ran a hosiery store and the place he labored often and remembers being surrounded by neighbours and family who have been fairly well-off. He claims that he realized the significance of wealth-building fairly early in life, having learn ‘Think and Grow Rich’, a best-selling self-help guide again then.

Stock markets have been at all times a part of his life in some kind or the opposite. His father and grandfather had of their possession some bodily share certificates of Indian corporations. At instances, he even traded on these firm shares.

But it was solely within the mid-Eighties that Khemka began getting severe about inventory markets. He recollects that in July 1985, his family had gathered for his grandmother’s funeral and the one subject of dialogue that point was the markets. And then, between 1985 and 1986, the BSE Sensex delivered greater than 100% returns. This was India’s first market bull run.

At round this time, Khemka determined to change into an entrepreneur. He arrange a small agency referred to as Trinity Ventures with two buddies with a capital of ₹3 lakh (every of them contributed ₹1 lakh). He had even borrowed some cash from family and buddies then. But these early investments didn’t end up properly. Khemka additionally fell prey to fraudsters who duped him with faux share certificates, however that didn’t in any method dissuade him from coming into the markets .

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In 2003, he grew to become a portfolio supervisor. He managed US mutual funds, moreover accounts for US traders and people outdoors, individually.

Career path

Those have been the times when the funding business in India was at a really nascent stage, with only a few profession alternatives. Khemka says a lot of his buddies wished to review engineering after which go to the US. And so did he. Khemka studied mechanical engineering, at a school close to his home. After getting his diploma, he even bought an admission at each the Jamnalal Bajaj Institute of Management Studies and IIM Ahmedabad. But that was when he bought the US visa. He went to the US and pursued Masters in Business Administration (MBA) at Vanderbilt University (1996-1998) on a full scholarship.

In 1998, he joined State Street Global Advisors in Boston as a senior portfolio supervisor. “My professor really helpful me to State Street for his or her quant enterprise due to my engineering background,” Khemka says.

It wasn’t easy getting opportunities in the investment industry. He says quant helped him get a footing there. “But I always wanted to get on the fundamental analysis side and on the buy-side.”

The child steps

In one yr, he moved from quant to elementary aspect inside State Street itself. The following yr, Khemka bought the chance to maneuver to Goldman Sachs on the buy-side, the place he may handle purchasers’ funding portfolios.

Initially, he tracked telecom, then print media and publishing, as a sector analyst for the US Growth Equity. Telecom in US was in a giant increase part at the moment, Khemka recollects.

In 2003, he grew to become a portfolio supervisor. He managed US mutual funds, moreover accounts for US traders and people outdoors, individually.

Around this time, Khemka bought to analyse a number of web corporations of their early levels, which as we speak are international giants. Google was one in every of them and Khemka was capable of take part in Google’s itemizing within the US fairness markets. However, he missed out on Amazon as a result of its enterprise mannequin didn’t make sense to him again then. “It appeared that the extra gross sales it was doing, the extra losses it was incurring,” Khemka says. Only later, several other companies started adopting its sales strategy in the hope of becoming the next Amazon.

Homecoming

Almost 11 years after he stepped foot in the US, Khemka was keen to move back home. In 2006, he got the opportunity to set up and lead the asset management business of Goldman Sachs in India. Goldman Sachs obtained a MF license from Sebi only in 2008, and that happened in the aftermath of the Lehmann crisis. “So, the MF launch plan was put on hold for some time. But Goldman Sachs had already launched an offshore strategy focusing on Indian markets in March 2007, which did quite well. It took quite some time to scale that because of the 2008 financial crisis, but we got clients through separately managed accounts for that strategy,” Khemka recollects.

In 2011, Goldman Sachs lastly launched its India Equity Fund for home traders. This coincided with its acquisition of passive funds enterprise of Benchmark Mutual Fund.

However, at the moment, the markets have been going by way of a turbulent part. The S&P BSE Sensex had fallen 25% in 2011. It recovered strongly the very subsequent yr however taper tantrums began in 2013, placing strain again on the markets.

By 2013, when Khemka was headed to Singapore to supervise investments in rising markets (EMs) for Goldman Sachs, the latter was planning to exit the MF enterprise in India because it didn’t obtain the specified scale.

Wider funding canvas

Khemka says managing investments in EMs was a terrific expertise. “I had already managed funds and methods within the developed world. I had additionally been managing funds in India for lengthy. The EM alternative allowed me to have a look at companies throughout 25-30 international locations, from South Korea to Mexico. This gave me quite a lot of funding insights, and perceive how completely different economies have developed through the years vis-a-vis India,” he says.

In 2017, he called it quits at Goldman Sachs and launched his entrepreneurial journey, again. He started WhiteOak Capital, which initially managed offshore money in its India-dedicated strategies. Later, it offered AIF and PMS strategies for domestic Indian investors. However, Khemka wanted to launch a mutual fund business. In September 2021, WhiteOak got Sebi approval for the same. What explains the delay? “Because it deals with retail money, regulators all over the world try and ensure that there are adequate safeguards in place,” Khemka says.

WhiteOak Capitial Mutual Fund as we speak manages AUM of about ₹1,500 crore. The fund launched its first fairness fund—WhiteOak Capital Flexi Cap Fund—on 12 July 2022.

The fund home plans to launch a GEM fund for Indian traders quickly —as soon as Sebi lifts the abroad investing limits for Indian mutual funds. It would be the first-of-its-kind scheme for Indian traders since it will likely be actively-managed by the in-house funding workforce of a home fund home, moderately than feeding from one other worldwide mutual fund. WhiteOak Capital has launched an identical fund in its offshore platform for overseas traders.

Recently, it acquired an funding administration agency that invests in developed world markets. As of now, this acquisition is simply to enrich its offshore EM technique, the place it additionally invests in developed markets. “For instance, you may take publicity to China by way of a French luxurious model as this nation accounts for one-third of its revenues, and get EM publicity by way of different developed world corporations,” Khemka says

While the MF business will have separate fund managers and a chief investment officer, the 40-member strong research team of WhiteOak will be shared across AIF, PMS and MF.

What next?

In the coming years, Khemka expects the ₹40-trillion Indian MF industry to become much larger. He recalls the conversation he had with his boss at Goldman Sachs when he was looking to relocate to India. “The data I was sharing with my boss back in 2004 was that Indian asset management companies (AMCs) had a total AUM (assets under management) of $4 billion only, while our team in the US alone managed $30 billion of assets and I had been assigned as senior portfolio manager overseeing close to $10 billion of assets.”

Khemka could be very bullish about India’s funding state of affairs. “Today, simply the Indian AMCs’ fairness asset base has grown to over $200 billion, which is 50-times progress in greenback phrases,” he says. That explains about why he’s betting massive on mutual funds and its progress in India.

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