At a time when most money
managers are steering clear of
India's crisis-hit
shadow banking firms,
veteran emerging markets
fund manager Mark
Mobius is exploring aggressive contrarian
bets on the sector.
Mobius'
bet comes at a time when investors have been selling holdings in non-banking finance companies (NBFCs) after a series of defaults by
India's leading infrastructure finance company in Sept
ember triggered contagion fears and prompted the government to step in and take control of the company.
"Believe it or not we are looking at non-banking finance companies,"
Mobius told Reuters on Tuesday. "It
looks crazy but everybody knows that the banking sector is in trouble."
"Now is the time to start looking because the prices are down but that requires research. You got to look at these companies carefully."
Mobius, who quit as head of Franklin T
empleton's
emerging market
funds in January, has started his own London-based
Mobius Capital Partners that aims to pick up direct equity stakes in companies instead of buying exchange-traded
funds to generate higher returns.
The
fund, which has $160 million of assets under manag
ement so far since May, plans to invest $30 million to $40 million in India, said
Mobius, 81, who has
bet heavily on Indian assets in the past.
Mobius, who is awaiting for approval of registration of the investment firm by
India's market regulator, says he has already spoken to five NBFCs.
"It's still very early days. We'll have to visit th
em, sit down with th
em person to person and get a feel for what their thinking is."
The debt woes of
India's Infrastructure Leasing & Financial Services led to a massive sell-off in finance companies which lost 32.7 percent since Sept
ember dragging the broader BSE stock index down 11.7 percent.
Mobius Capital will earmark 20 percent of its investments each in India and Brazil followed by Turkey, Mexico, Vietnam, Taiwan and Korea which could see about 5-10 percent allocation each,
Mobius said on the sidelines of Morningstar's investment conference in Mumbai.
Mobius is looking to invest at a time when several foreign investors are pulling out of India due to uncertainties in the financial sector, rising oil prices, a weaker rupee, and fiscal worries ahead of general elections next year.
Foreign investors have pulled $13 billion out of
India's debt and stock markets since the start of 2018.
Despite this,
Mobius said the investors in his company are bullish on
India's growth prospects and expect annual returns of 15-20 percent from equities in the next five years.
"All you have to do is tell th
em India is growing at 7 percent and they're sold."
(Edited by : Aastha Agnihotri)
First Published: Oct 23, 2018 11:50 PM IST