Institutional Investor's Alpha Magazine - October 2007 - (Page 60)

Investing in India a friendlier environment for hedge funds by lifting the ban on shorting. That change, coupled with the country’s relatively untapped investment opportunities and its burgeoning class of young consumers, is starting to make the market more attractive to investors. India currently has about 435 million people in the 25- to 55-year-old consumer range, a number that will rise to more than 550 million in the next three years, according to data from the National Council of Applied Economic Research in New Delhi. “For hedge funds targeting India, the potential for growth is tremendous,” says Thakur. He points to the performance of the Bombay Stock Exchange sensitive index — which tracks the exchange’s 30 biggest and most actively traded listings and has risen more than 40 percent in each of the past two years — and the 8 to 9 percent annual growth of India’s economy. Foreign institutional investors have poured tens of billions of dollars into India’s public and private markets the past few years. The opportunity was not lost on Gautam Prakash, the U.S.-born son of Indian immigrants. In 2004, after working as an adviser for Mauritius-based ChrysCapital, a $2.25 billion private equity firm focused on India, Prakash decided India was ready for hedge funds. With $5 million in capital from family and former colleagues at Wellesley, Massachusetts–based Bessemer Venture Partners, he launched Monsoon Capital. Monsoon, which is located in Bethesda, Maryland, is now the world’s largest hedge fund exclusively focused on India, with $900 million under management — funding raised from family ofﬁces, university endowments, corporate investors and wealthy individuals. Investors have not been disappointed. Since inception, the ﬁrm has delivered an average annual return of 52 percent. In fact, with hedge funds’ combined assets invested in India totaling a paltry $6 billion, split among roughly 70 funds, according to data from Singapore-based hedge fund research firm GFIA, Monsoon is well ahead of the competition. One reason for the hedge fund industry’s sluggish growth in India is that current SEBI regulations prohibit hedge fund ﬁrms from registering in the country. To trade Indian stocks, ﬁrms such as Hudson Fairfax must register as foreign institutional investors — a lengthy and expensive process. But SEBI still has ﬁnal say over who can trade the country’s stocks. When it is obvious a firm plans to hedge, the regulator is quick to throw up roadblocks to keep it from obtaining FII status. Additionally, hedging tools are extremely limited. Despite the Indian market’s more than 6,000 publicly traded companies, only 160 Indian single-stock futures exist. To sidestep such complications, most hedge funds invest WHAT MAKES US DIFFERENT? IT’S A QUESTION WE ASK OURSELVES EVERY DAY. IT KEEPS US ON OUR TOES AND OUR CLIENTS HAPPY. TODAY AND EVERY DAY, WE GIVE OUR CLIENTS THE CHANCE TO OWN THE TRADING DAY. INSTANT ACCESS TO MULTIPLE ASSET CLASSES IN MULTIPLE MARKETS AS WELL AS DEEP POOLS OF LIQUIDITY HELP MAKE IT POSSIBLE. THE DAY WE STOP ASKING, “WHAT MAKES US DIFFERENT?” IS THE DAY THERE WON’T BE ANY DIFFERENCES. TO LEARN MORE ABOUT KNIGHT CAPITAL GROUP (NASDAQ: NITE) GO TO KNIGHT.COM. © 2007 Knight Capital Group, Inc. All rights reserved. http://KNIGHT.COM

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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