Fund Focus: Nariman Point Views Japan Through Demographic Lens

Jun 9 2011 | 11:07am ET

Vishaal Bhuyan’s experience in the insurance-linked securities industry causes him to see the world through an interesting lens: demographics.

Five years focusing on things like “longevity risk, life settlements and other types of re-insurance” combined with the realization that life as a consultant wasn’t all it was cracked up to be (“It can be a good situation,” he told FINalternatives with a laugh, “but when push comes to shove, they don’t really have to listen to you.”) inspired Bhuyan to start his own investment business, Nariman Point.

Another “driving engine” for the new venture, he says, was a trip to Japan, a country just beginning to come to terms with its grim demographic realities—22% of its population is over 65.

“These people have all these defined benefit pension schemes that are underwritten very poorly, they’ve got all this debt, both on the sovereign and the corporate side, and so I started doing some research for about four or five months and that’s what helped me raise the initial capital,” Bhuyan says.

That capital—just under $20 million—came from relationships established during his time in the insurance-related securities industry, where he’d started out on the market-making side, pairing up with a large clearing firm on a commodities exchange to build an electronic platform for OTC insurance-linked derivatives.

“That was working really well,” he said, until “derivatives really became four-letter words.” At that point, anything on the platform that wasn’t liquid or easily marked dried up. Clients they’d solicited for the platform began coming to him for help first understanding, then unwinding some of their more esoteric positions.

“I really understand these things and that sort of led to a gig with a couple of larger clients that actually had more of a positive spin on it in the sense that they were actually looking to come in as distressed buyers, not liquidators.” Bhuyan then began working with a few large family offices and private equity firms looking to purchase distressed portfolios or companies that were originating insurance-linked investments.

He began building platforms to help clients manage these complex assets and eventually started thinking, “Why don’t I do this on my own? It will probably be much more fruitful.”

Last November he got serious about setting up his own shop and the result is Nariman Point, which opened its doors in January 2011 and began trading and investing in early spring. The name comes from a neighborhood in Mumbai which Bhuyan, an American of Indian descent, visited every summer as a child. “When I was a kid I’d go there and there was livestock everywhere—no, that’s an exaggeration, it was always a kind of ritzy area, but now there’s an IMAX theatre, it just looks like a different place.”

His first capital allocations have been to “very bearish views” in Japan. Typically, he says, short Japan positions have not been profitable, but “as 22% of the country really is coming to retirement and these huge liabilities are actually due in the next couple of years, I saw a big opportunity to take what I’ve learnt and stretch myself a little bit and go for it because I feel I had a pretty good edge there in looking at Japan through that demographic lens.”

Nariman Point, based in New York, offers its clients managed accounts. The minimum investment is $1 million but the caveat, says Bhuyan, is that a client’s total worth should be much higher—in the $75-$100 million neighborhood. “Basically,” he laughs, “I’d like them to be able to have a family office.”

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