Friday, 5 February 2016
Last updated 3 min ago
Feb 6 2007 | 4:01pm ET
Matt Mongia, formerly with India-focused hedge fund shop Monsoon Capital, is launching a multi-strategy India-focused fund dubbed the Vishwas India Fund. The fund is set to launch in March with some $10 million to $20 million in initial equity.
Mongia, who focused on marketing, raising capital, operations and regulatory compliance issues for Bethesda, Md.-based Monsoon, said his split with Monsoon founder Gautam Prakash was amicable. “When I joined Monsoon, my plan all along was to assist with the first fund for whatever that lifecycle turned out to be,” he said.
“Originally, I had planned to launch my own India fund with my current partner but, for a variety of reasons, things didn’t come together, and I opted to go with Monsoon. My thinking was that being part of a fund from launch to closing would better prepare me to launch my own product.”
Mongia and Prakash had discussed launching another fund within Monsoon, but Mongia decided to branch out on his own. Prakash recently closed his Monsoon India Inflection Fund, Monsoon India Inflection Fund II and the Caymans-based Monsoon India Cayman Inflection Fund Ltd. with a combined $600 million in January.
The Monsoon funds take a private equity slant to investment opportunities, investing in small- to mid-cap companies across a wide range of industries. About one-third of its transactions are structured negotiated deals, including private investments in public equity and minority stake p.e. transactions where the funds take a 10% to 20% stakes in the acquired companies. Two-thirds of their transactions are secondary purchases acquired in the open market or through block trades.
Mongia is taking a different approach to India in the form a multi-strategy vehicle. The fund will invest in liquid, large-cap equities with a value bias, event-driven and special situations, and derivatives/arbitrage trading opportunities.
The Raleigh, N.C.-based fund will hedge its positions through the use of futures, options and synthetic shorting. “Many of the global investment banks, like Deutsche Bank or Citigroup, have an inventory of Indian equities that they will do a synthetic short against, so we’ll be able to do just about everything synthetically even though it can’t be done in the same manner as in the U.S.,” Mongia says.
Mongia has teamed up with Ajit Dayal, former founder of Quantum Advisors, India’s first equities research firm advising Jardine Fleming, Walden-Nikko India Ventures and Hansberger Global Investors, for his latest venture. Dayal will be based in Mumbai, India, with a team of three traders.
Mongia is optimistic about the Indian market in light of regulatory and corporate changes in the region. “There’s a great deal of receptiveness on behalf of the Indian government and corporations, many of which are growing at a tremendous pace but need additional financing to fund that growth,” he says.
“Many Indian companies are also more keen to have ownership of their shares distributed across a wide base of investors and are now allowing for a greater level of transparency.”
The new fund charges a 2% management fee and 20% performance fee, with a $500,000 minimum investment requirement.