(Adds current position of Mark Schwartz)
By Nishant Kumar
HONG KONG May 14 Steadview, an India-focused
hedge fund seeded by Goldman Sachs (Asia) chairman Mark
Schwartz, has made 12 times the returns of peers with bets on
consumer and tech stocks, helping the fund grow its assets to
$500 million in nearly five years.
Founded and managed by Hong Kong-based Ravi Mehta, a former
Morgan Stanley banker, Steadview's success stands out
among Indian hedge funds who have seen their collective assets
plunge by more than 50 percent to $2.4 billion since the 2008
financial crisis, according to data from Eurekahedge.
Schwartz actually backed the fund after he had left Goldman
in 2001. He returned as chairman of Goldman Sachs Asia Pacific
in 2012, according to a statement from the bank.
Mehta, a former analyst at hedge fund Maverick Capital in
New York, said the outcome of Indian general elections has no
bearing on how he invests, but domestic consumption and capital
expenditures by corporates may pick up if the next government
gets a strong mandate as there is pent up demand in the economy.
"In order to ensure that growth structurally accelerates,
reforms such as GST and the reform of labour laws are necessary
to improve economic efficiency," Mehta, who started his fund
with just $500,000 in July 2009, told Reuters.
The assets hit $500 million this week.
Indian shares have hit all-time highs for three consecutive
trading sessions on optimism the opposition Bharatiya Janata
Party led coalition could get a majority in the elections that
ended this week. The results are due on Friday.
Mehta's fund has generated a 131 percent return since its
launch, while the India share index is up about 22
percent in dollar terms in the same period. India hedge funds as
measured by the Eurekahedge have returned 11 percent.
India has become a dominant global player in software and
drug exports, leveraging its vast pool of engineers that grows
by 1.5 million every year. High-end manufacturing is going to be
the next sector to achieve global competitiveness, Mehta said.
Motorcycle maker Eicher Motors Ltd is among the
companies in which Mehta invested. Eicher's Royal Enfield
motorcycles, a bike brand similar to Harley-Davidson, has 95
percent market share in that segment and over 40 percent return
on capital, he said. It's joint venture with Volvo AB
will be producing engines for Volvo's trucks, sourcing engines
from India instead of Germany.
Mehta is also focused on manufacturers that are ramping up
exports or reducing imported manufactured items. Kitchen
appliances maker TTK Prestige Ltd is one such company,
which has cut down on imports from China.
"It's more cost-competitive for them to make a lot of these
products on their own in India and to do import substitutions."
Jubilant FoodWorks Ltd, which operates the
Domino's Pizza brand with rights for India, Sri Lanka,
Bangladesh and Nepal, is another big exposure for Steadview.
India's "long-term story is unchanged and I think in many
ways it is better than it was five or 10 years ago," he said,
predicting India will be the best-performing major market over
the next three to four decades by a meaningful margin.
(Reporting by Nishant Kumar; Editing by Matt Driskill)