True Beacon, a disruptive alternative investment fund (AIF) set up by the famed Indian school dropout-turned-star entrepreneur Nikhil Kamath is considering Dubai or Abu Dhabi to launch a new fund of up to $1 billion.
The fund, which has a large number of Gulf-based ultra high net worth non-resident Indian (NRI) investors, also has plans to diversify its investments into asset classes other than the Indian equity and derivative market in which it solely invests currently, when it acquires a category 2 licence.
“After launching a moderate-risk appetite Scheme I, True Beacon is eager to launch other schemes that would suit a variety of investors with varying risk appetites. Although we haven’t narrowed down on the centre for the fund, it would be interesting to explore the Middle East region,” Nikhil Kamath, co-founder and chief investment officer, True Beacon and Zerodha, told Arabian Business in an exclusive interview.
“We would look at a corpus of about $700 million-$1 billion (for the proposed fund),” revealed Kamath, whose AIF disrupted the Indian asset management segment with its ‘zero management and standing fee but only profit-sharing revenue model’.
Kamath is best known for launching Zerodha Broking, an Indian financial services company, founded in 2010, which entered the unicorn club in June with a self-assessed valuation of about $1 billion, facilitating over 3 million orders daily with a daily turnover of over $10 billion.
Talking more about why True Beacon’s next series of funds might be launched in the UAE, Kamath said: “The common factor between Singapore, London, or New York – the traditionally favourite cities preferred for launching funds by Indian institutions and investors – is that the cost of set up and operations is quite high, given that all the three are global financial centres.
“Middle Eastern markets, however, stand out for a couple of reasons; first, the amount of government support to ease set up and operational costs.
“Dubai is also geographically advantageous since it sits between financially evolved markets such as Tokyo and New York, and emerging markets like India.”
Kamath also pointed out the support extended by some of the UAE institutions such as the Dubai International Financial Centre (DIFC), which not only reduces these costs but also provides certain tax waivers.
On the AIF’s proposed diversification plans for investments, Kamath said currently True Beacon invests only in the Indian equity and derivative markets.
“We aim to add strategic value to our clients’ portfolios by offering co-investment opportunities – real estate deals, next-gen and philanthropy programmes – that may arise in our network, at no charge.
“We could (now) potentially look at other asset classes – including real estate, start-ups or infra and other projects – with an AIF Cat-II licence. This is something that is in the strategic pipeline,” he said.
True Beacon’s Fund One, which has notched up a year-to-date return of over 40 percent, has been consistently outperforming India’s NIFTY 50 benchmark.
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