Returned Indian entrepreneurs seek new horizon with investment boutique
Saturday, 3 July 2010
Sharmistha Dey
"Economic recession teaches you to be conservative in your expenses and hold on to your job even if you were planning to quit the minute you got another," Indian entrepreneurs said recently, adding that however, the founders of Forefront capital did quite the opposite.
In the thick of the recession, three friends Radhika Gupta, Anant Jatia and Nalin Moniz egged by their passion and desire to be entrepreneurs, left their successful careers in the United States and returned to India to start their own company. Forefront Capital was born out of this desire.
Radhika, Anant and Nalin, all Wharton graduates, with careers at U.S. hedge funds and asset management companies came back to India in May 2009 and invested 20 million rupees (400,000 U.S. dollars) of their hard-earned money in starting a portfolio management system company in Mumbai.
"We decided to start Forefront Capital in March 2009. The global and Indian markets had bottomed out after the financial crisis and we thought that it was a once in a lifetime opportunity to start an asset management business. India's incredible growth story coupled with the fact that its capital markets are still nascent made Mumbai an ideal place to start up," said Radhika.
He said they were confident in India's long term growth story and wanted to be here to take advantage of it when the markets did bounce back, which they did shortly after they returned to India in May. "Many people told us that we were starting at the absolute worst time. We were looking to start a financial services firm a few months after the collapse of Lehman Brothers and the worst financial crisis since the Great Depression. However, in hindsight it was absolutely the best time to start," he said.
Radhika said asset valuations across the board were incredibly cheap and they had the opportunity to buy a number of blue-chip companies at a deep discount to their intrinsic values.
"In a business that starts and ends with investment track- record, the opportunity to start at the bottom was too good to pass up on. The best opportunities often come at what appear to be the worst of times, and nothing is a better example of this than Forefront,"he added.
Before coming to India, Nalin worked as a portfolio manager with Goldman Sachs Asset Management in New York, whereas Radhika and Anant were portfolio managers with AQR Capital, a 20 billion U. S. dollar alternatives manager in Greenwich, Connecticut.
With prior expertise in quantitative investing, the collective experience the troika brought together was invaluable in starting Forefront. Another plus was the lack of players in quantitative investing in the Indian markets, which they say, was one of main reasons in starting Forefront. "Forefront is a boutique asset management firm that focuses on quantitative investing. Quantitative investing an investing technique typically employed by the most sophisticated, technically advanced hedge funds," said Anant.
It is a disciplined computer-driven approach that is free of human emotion and bias. Globally, 10 to 15 percent of portfolios are managed using quantitative strategies, according to Anant.
"However, in India today this is close to zero percent. Penetration of equities as an asset class is also currently very low in India. For example, in the U.S., approximately 60 percent of the population invests in a mutual fund. In contrast, only 5 percent of Indians invest in mutual funds. As our markets become more developed, we expect both the equity penetration and the market share of quantitative strategies to rise dramatically,"he said.
Forefront is a boutique firm focused totally on portfolio management services (PMS) whereas for most firms PMS is one part of their larger business including mutual funds, brokerage and others. "Forefront specializes in quantitative investing and in building products across asset classes in this style. This is again, rare, in a market where asset management companies have strategies across different styles, rather than specializing in a particular approach,"said Anant.
The purpose of their project is providing world-class quantitative investment products combined with the personalized service of an investment boutique, he claimed.
"Our investment strategies are carefully constructed back tested with lengthy data series with the highest standards. We launch very few products because we believe each product should be unique, and have a strong commitment to improving our existing products with new research ideas. We also want to build long-term relationships with our clients, and spend a lot of time with them, making sure they understand what they do," he added.
There are 250 registered portfolio managers in India, comprising mutual fund companies, domestic and international banks, and brokers. Very few, however, are boutique firms, and very few focus solely on portfolio management services.
"At Forefront, we want to focus on building a boutique asset management business delivering consistent performance to our clients. The goal is to bring world-class investment solutions but still retain the innovativeness of a boutique. In terms of assets, we aim to be among the top 10 in terms of assets under management in the next five years,"says Nalin.
On asking about how they come through the transition, from working for others to being in charge of the business, Radhika said, adding"starting out is always tough, as we made the transition from our jobs to a business, from an American work environment to an Indian one."
"Yet, we were pleasantly surprised at how well our ideas and services have been received in India. Fortunately, because of our backgrounds, people were ready to give us an ear and listen to what we had to say, and that is how we slowly started building the business. The initial business came from family, friends, and connections through our alumni networks," he said.
He said gradually business grew through word of mouth, as well as through their marketing and PR efforts, and it continues to expand in many different ways.
"We became profitable in the first year of our operations," he said, adding "as quantitative strategies become more widely accepted and as they deliver strong results, we anticipate that there will be more entrants into the space."
As recently turned entrepreneurs who have tasted success, Radhika, Nalin and Anant have this to say," the primary reason to be an entrepreneur is your passion. Starting a business is tough -- physically, in terms of the number of hours you have to put in, and also mentally and emotionally. If you do it for the money or the glamour, it will be very difficult to sustain yourself. Your love for what you do will carry you through the tough times." - Xinhua
"Economic recession teaches you to be conservative in your expenses and hold on to your job even if you were planning to quit the minute you got another," Indian entrepreneurs said recently, adding that however, the founders of Forefront capital did quite the opposite.
In the thick of the recession, three friends Radhika Gupta, Anant Jatia and Nalin Moniz egged by their passion and desire to be entrepreneurs, left their successful careers in the United States and returned to India to start their own company. Forefront Capital was born out of this desire.
Radhika, Anant and Nalin, all Wharton graduates, with careers at U.S. hedge funds and asset management companies came back to India in May 2009 and invested 20 million rupees (400,000 U.S. dollars) of their hard-earned money in starting a portfolio management system company in Mumbai.
"We decided to start Forefront Capital in March 2009. The global and Indian markets had bottomed out after the financial crisis and we thought that it was a once in a lifetime opportunity to start an asset management business. India's incredible growth story coupled with the fact that its capital markets are still nascent made Mumbai an ideal place to start up," said Radhika.
He said they were confident in India's long term growth story and wanted to be here to take advantage of it when the markets did bounce back, which they did shortly after they returned to India in May. "Many people told us that we were starting at the absolute worst time. We were looking to start a financial services firm a few months after the collapse of Lehman Brothers and the worst financial crisis since the Great Depression. However, in hindsight it was absolutely the best time to start," he said.
Radhika said asset valuations across the board were incredibly cheap and they had the opportunity to buy a number of blue-chip companies at a deep discount to their intrinsic values.
"In a business that starts and ends with investment track- record, the opportunity to start at the bottom was too good to pass up on. The best opportunities often come at what appear to be the worst of times, and nothing is a better example of this than Forefront,"he added.
Before coming to India, Nalin worked as a portfolio manager with Goldman Sachs Asset Management in New York, whereas Radhika and Anant were portfolio managers with AQR Capital, a 20 billion U. S. dollar alternatives manager in Greenwich, Connecticut.
With prior expertise in quantitative investing, the collective experience the troika brought together was invaluable in starting Forefront. Another plus was the lack of players in quantitative investing in the Indian markets, which they say, was one of main reasons in starting Forefront. "Forefront is a boutique asset management firm that focuses on quantitative investing. Quantitative investing an investing technique typically employed by the most sophisticated, technically advanced hedge funds," said Anant.
It is a disciplined computer-driven approach that is free of human emotion and bias. Globally, 10 to 15 percent of portfolios are managed using quantitative strategies, according to Anant.
"However, in India today this is close to zero percent. Penetration of equities as an asset class is also currently very low in India. For example, in the U.S., approximately 60 percent of the population invests in a mutual fund. In contrast, only 5 percent of Indians invest in mutual funds. As our markets become more developed, we expect both the equity penetration and the market share of quantitative strategies to rise dramatically,"he said.
Forefront is a boutique firm focused totally on portfolio management services (PMS) whereas for most firms PMS is one part of their larger business including mutual funds, brokerage and others. "Forefront specializes in quantitative investing and in building products across asset classes in this style. This is again, rare, in a market where asset management companies have strategies across different styles, rather than specializing in a particular approach,"said Anant.
The purpose of their project is providing world-class quantitative investment products combined with the personalized service of an investment boutique, he claimed.
"Our investment strategies are carefully constructed back tested with lengthy data series with the highest standards. We launch very few products because we believe each product should be unique, and have a strong commitment to improving our existing products with new research ideas. We also want to build long-term relationships with our clients, and spend a lot of time with them, making sure they understand what they do," he added.
There are 250 registered portfolio managers in India, comprising mutual fund companies, domestic and international banks, and brokers. Very few, however, are boutique firms, and very few focus solely on portfolio management services.
"At Forefront, we want to focus on building a boutique asset management business delivering consistent performance to our clients. The goal is to bring world-class investment solutions but still retain the innovativeness of a boutique. In terms of assets, we aim to be among the top 10 in terms of assets under management in the next five years,"says Nalin.
On asking about how they come through the transition, from working for others to being in charge of the business, Radhika said, adding"starting out is always tough, as we made the transition from our jobs to a business, from an American work environment to an Indian one."
"Yet, we were pleasantly surprised at how well our ideas and services have been received in India. Fortunately, because of our backgrounds, people were ready to give us an ear and listen to what we had to say, and that is how we slowly started building the business. The initial business came from family, friends, and connections through our alumni networks," he said.
He said gradually business grew through word of mouth, as well as through their marketing and PR efforts, and it continues to expand in many different ways.
"We became profitable in the first year of our operations," he said, adding "as quantitative strategies become more widely accepted and as they deliver strong results, we anticipate that there will be more entrants into the space."
As recently turned entrepreneurs who have tasted success, Radhika, Nalin and Anant have this to say," the primary reason to be an entrepreneur is your passion. Starting a business is tough -- physically, in terms of the number of hours you have to put in, and also mentally and emotionally. If you do it for the money or the glamour, it will be very difficult to sustain yourself. Your love for what you do will carry you through the tough times." - Xinhua