How is the alliance structured

As per the terms of the agreement, the relationship will be structured as an Alternate Investment Fund registered with SEBI. The AIF will raise Rs.3,500 crore from small and large investors and purely invest the amount in a portfolio of turnaround companies. This includes companies that are pre-stressed, or that are stressed or which are under NCLT or in various types of litigation. Axis will be the fund manager while Inversion will provide its expert inputs in identifying such turnaround companies in India. Inversion Advisors was promoted by Akhil Gupta. He is better known as the man behind the frenetic growth of the Bharti Airtel telecom rollout as well as the driving force behind the African Zain acquisition by Bharti in 2007. Inversion has built a team of domain industry specialists who bring deep expertise in identifying such undervalued targets. Inversion will provide the technical input for the fund and Axis will play the role of the fund manager taking the eventual decision on portfolio. This is a unique structure which gives investors access to an absolutely unique class of assets. 

New role for mutual funds

For too long, Indian mutual funds have largely been plain vanilla in their product offerings. Equity funds did as well or as badly as the stock market indices. The debt funds have collectively got into trouble when the issuers have got into trouble. In short, unlike the Western markets, there were no alternate assets offered by Indian mutual funds. This will be the first example where a mutual fund will offer alternate assets and it will also package and offer it to retail as an additional asset class. As the market gets crowded, Indian mutual funds have to look at more such innovative asset classes to add value. This is, hopefully, the start of more such unique products. 

Too plain for its AUM size

If you look at mutual funds in the West, there is a huge palate consisting of active funds, passive funds, semi-active funds, managed index funds, structures etc. In comparison, the Indian mutual fund industry is still thriving on plain vanilla stuff. Remember, Indian mutual fund industry is not small any longer. With $500 billion in AUM, and over 4.50 crore SIP accounts, it is time for  Indian mutual funds to take the next step in launching innovative products. Mutual funds must offer a wider range of high risk, medium risk and low risk products and allow the investors to make a more intelligent choice. That is the next step for Indian mutual funds to evolve!