| The India story is selling big time. Hedge funds, which usually invite a select group of investors to subscribe to their schemes, are now floating India-specific schemes for general subscription. | |
| Hedge funds, such as New Vernon, Boyer Allan, Voyager India, Indus, Orris Capital and a few others, are looking at raising around $500 million in overseas markets before the end of the current calendar year to invest in Indian equities. | |
| According to sources familiar with the situation, at least seven to eight hedge funds are raising money in markets such as the US and UK to invest in India and other emerging equity markets. The money is being raised through schemes specially floated for this purpose. | |
| New Vernon, promoted by Aarhad Zakaria, has already raised around $150 million and is expected to close its scheme with a corpus of $450 million. | |
| Zakaria was formerly with Merrill Lynch as head of global markets. Voyager Capital had also set up a fund dedicated to India and raised $100 million, sources said. Other funds have set themselves a target subscription of at least $100 million. | |
| At least 10 hedge funds have set up offices in India and are recruiting local talent. It becomes viable for the funds only if they raise at least $70 million. So, the schemes floated by them remain open until they raise the minimum amount. | |
| Industry sources said hedge funds were typically looking for growth stories and with returns having peaked in a few "star" emerging markets, they were forced to rework their strategies. Hence the new-found love for other emerging markets. | |
| Devesh Kumar, head of equities at ICICI Securities, told Business Standard: "Hedge funds are looking at India in a big way and are ready to take long-term bets as they see a huge potential. They want to take advantage of an early move into various sectors, with an investment view of two to three years." | |
| Falguni Nayar, executive director in charge of institutional equities at Kotak Securities, said, "Interest in Indian equities is very much evident in terms of the number of funds that are looking at setting up India-dedicated funds." | |
| Industry observers said the money raised was likely to chase mid-cap growth stories rather than frontline stocks. Market sources said there had been a distinct change in hedge fund trading strategies since they had become more familiar with the Indian markets. | |
| Previously, it used to be pure index play. But a micro-perspective has led them to bet on specific stocks. Setting up an establishment in India will also make them ready for the plunge when the Securities and Exchange Board of India decides to allow hedge funds to register here.
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