HDFC AMC Select AIF FOF – I

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About HDFC Group

A recognized financial conglomerate with presence in housing finance, banking, life and non-life insurance, asset management, real estate funds and education finance.

HDFC Asset Management Company (HDFC AMC) is the investment manager to HDFC Mutual Fund, one of India’s largest Mutual Funds by Assets Under Management (AUM). Our consistent position as one of India’s leading asset management companies is driven by our comprehensive investment philosophy, process and risk management. HDFC AMC is a registered portfolio manager with SEBI and is licensed to act as an investment manager to Category-II Alternative Investments Funds.

Our Group’s history of serving customers across financial products gives us the credibility and confidence to develop new solutions that are relevant to different audiences in evolving markets.

As the private markets industry in India grows increasingly complex, teamwork and information sharing across the landscape has never been so important

Our integrated approach enables HDFC Alternatives to operate as a cohesive, connected team by sharing relationships and insights ― all elements that lead to better solutions for our clients.

Fund Snapshot

Fund Type: Category II AIF
Target Corpus 1,500 crore + green shoe of up to 1,500 crore
Investment Manager Contribution: 10% of Capital Commitment raised
Term of the Fund: 11 + 1 + 1 years
Minimum Capital 1 crore
Commitment Period: 5 Years
Management Fee & Carry: 2% p.a. Management Fee & 20% Carry with full catchup
Hurdle Rate XIRR of 10% (pre-Tax) in Indian Rupees on Capital Contributions received by the FOF Scheme I

Optimal Portfolio Construction

    • Focus on optimizing risk, improving returns and augmenting cash flows
    • Seek managers with complementary attributes
    • Flexibility to explore secondaries and winners funds across the spectrum―J curve mitigation and improved cash yield
    • Endeavour to enhance performance of the fund by capitalizing on co-investment opportunities

Robust Risk Management & Governance

    • Exposure to a single fund capped at 20% of the total capital commitment
    • Capital commitment in any fund will not be more than 20% of the underlying fund’s total capital commitment
    • Detailed diligence of downstream funds documents and structures by an external legal counsel
    • Demonstrate rigorous accountability, transparency, and adoption of best practices as well as aim to achieve similar objectives the underlying investee funds

Access

    • Overcome the challenges related to minimum commitment requirement in certain funds
    • Provide inroads into hard-to-access funds
    • Solve the challenge of minimum commitment size required to achieve proper diversification across multiple funds
    • Institutional status and larger commitment paves the way for co-investment opportunities and investor advisory committee presence.

Performance Reporting & Analysis

    • Overcome the challenges related to minimum commitment requirement in certain funds
    • Provide inroads into hard-to-access funds
    • Solve the challenge of minimum commitment size required to achieve proper diversification across multiple funds
    • Institutional status and larger commitment paves the way for co-investment opportunities and investor advisory committee presence.

Why HDFC AMC Select AIF FOF-I?

    • Leverage our expansive network and provide access to funds with high minimum capital commitments and hard to access funds
    • Effective: Diversification Stage, sector, style, vintage, investment type
    • Diligence: Exhaustive qualitative & quantitative diligence coupled with comprehensive due diligence by an external firm

Risk

  • CAPITAL RISK

Investments are predominantly in early, high-growth, transitory stages of a business, an investor may witness erosion of capital.

  • LIQUIDITY RISK

The fund is close ended with a tenure of (11+1+1 years)

  • COMMITMENT RISK

Essential to fulfill all drawdowns, failure to do so will trigger default clause

About the Fund

Portfolio Construct:

  • Up to 50% in venture capital funds and balance in private equity funds
  • Maximum exposure to co-investment opportunities will be capped at 30% of the corpus

Portfolio Characteristics:

  • Invest in ~15 VC/PE funds
  • Diversified across various stages, investment styles, sectors and vintages

Investment Strategy

To concentrate capital into what we believe to be a best-in-class set of funds and available co-invest opportunities. We will leverage our network to gain access to what we have determined to be the most attractive opportunities at ideal stages and through efficient structures. We believe this strategy is designed to produce an asymmetric return profile that may limit losses while capturing the attractive upside that venture and growth equity investments can provide.

Private Market Edge

  • Potential to earn higher returns: As companies are in early, high-growth, transitory stage of their life cycles
  • Diversification: Complementary to listed equity portfolio
  • Close proximity: Value-add and deep engagement approach enable managers to influence outcomes of their investment
  • Wider investment universe: Access companies and sectors not available in listed markets― number of private companies is higher than listed

Venture Capital ― Early Adopters

  • Potential to earn higher returns: As companies are in early, high-growth, transitory stage of their life cycles
  • Diversification: Complementary to listed equity portfolio
  • Close proximity: Value-add and deep engagement approach enable managers to influence outcomes of their investment
  • Wider investment universe: Access companies and sectors not available in listed markets― number of private companies is higher than listed

Sectoral breakup of active startups in India

  • Enterprise tech: 18.7%
  • Ecommerce: 12.8%
  • Fintech: 12.1%
  • Consumer Services: 9.5%
  • Healthtech: 8.9%
  • Edtech: 8.0%
  • Media & Entertainment: 7.9%
  • Deeptach: 6.9%
  • Other: 15.2%

Key Differentiators

  1. Proactive outreach to managers
  2. Preliminary scan
  3. Exhaustive qualitative & quantitative screening
  4. Deep-dive onsite visit
  5. Leverage our network to perform extensive reference checks
  6. Comprehensive due diligence by an external firm
  7. Final investment case presented to the IC

Holistic, Rigorous & Analytical Fund Selection

  • Holistic, Rigorous & Analytical Fund Selection
  • Our Preferred Partners
  • Optimal Portfolio Construction
  • Robust Risk Management
  • Effective Diversification
  • Access
  • Performance Reporting & Analysis
  • High Governance Standards

Preferred Partners

  1. Well-aligned managers with established track records
  2. Emerging managers with distinguished backgrounds and experience in the ecosystem

Partner with managers who have:

    • Clear investment thesis
    • Value-add approach
    • Disciplined process
    • Credibility in investment community
    • Robust risk management & governance framework
    • Inclination to go beyond the legal and contractual obligations in disclosures and information sharing

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Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.