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Only An Investor Understands Another.

AIG India Equity Fund


An open ended equity scheme

April 2007

Presented by

AIG Global Asset Management Company


(India) Private Limited

This material must be read in conjunction with the Disclosure Statement.

AIG Global Investment Group comprises a group of international companies


which provide investment advice and market asset management products and
Atlanta • Bangkok • Barcelona • Berlin • Birmingham • Bucharest • Budapest • Buenos Aires services to clients around the world.
Dallas • Dublin • Hartford • Hong Kong • Houston • Istanbul • Jakarta • Jerusalem • Johannesburg
Kuala Lumpur • London • Los Angeles • Madrid • Manila • Melbourne • Mexico City • Milan
Moscow • Mumbai • Nairobi • New York • Prague • Rome • San Francisco • San Juan • Santiago
Seoul • Sao Paulo • Shanghai • Singapore • Taipei • Tokyo • Toronto • Vienna • Warsaw • Zurich
Table of Contents

I. Our Parentage - Overview

II. AIGGIG's Equity Capability

III. India Outlook

IV. Liquidity to Drive Markets

V. AIG India Equity Fund

VI. Investment Team

VII. Appendix

• Disclosure

This material must be read in conjunction with the Disclosure Statement.

2
I. Our Parentage - Overview

3
American International Group, Inc. (AIG) Overview

n One of the largest, most financially strong and stable


financial groups of the world with USD 979 billion in
own assets
n Started operations in 1919 in Shanghai, China
n Ranked 9th in the 2006 list of Fortune 5001 companies
n Global businesses include General Insurance, Life
Insurance, Retirement Solutions, Asset Management
and Financial Services
n Head Quartered in New York
n Market Capitalization of USD 174.83 Bn (NYSE) as on
March 29, 2007
n Over 106,000 employees across member companies
operating from 130 countries and jurisdictions AIG Headquarters in New York

AIG’s unrivaled ability to combine local expertise with global networking capabilities creates unique
opportunities for our more than 65 million customers worldwide.

1 Fortune 500 is an annual ranking of America’s largest corporations published from the April 17, 2006 issue.
Data as of 31 December 2006 unless specified otherwise.

4
AIG Global Investment Group

General LifeInsurance
Life Insurance&& Asset Financial
Insurance RetirementServices
Retirement Services Management Services

AIG Global Investment Group (AIGGIG)


AIGGIG Global Wealth Management
AIG SunAmerica Asset Management Corp.
AIG Advisor Group, Inc.

AIG Global Investment Group comprises a group of international companies which provide investment advice and market asset management products and services to clients around the world.
Services and products are provided by one or more investment management subsidiaries of American International Group, Inc. (AIG).

5
AIG Global Investment Group’s Overview

Experienced Asset Manager


Equities
§ Global, Country and Regional
US $670.4 billion in assets under
§ Large, Mid and Small Cap
management. § Emerging Markets
§ Indexed
More than 1,900 employees worldwide
Fixed Income Private Equity
with over 450 investment professionals. § Global, Country and Regional § Funds-of-Funds
§ Investment Grade § LBO, Mezzanine, Secondary
• Over 100 equity professionals § Emerging Markets § Sponsored Funds
§ Municipal Bond § Private Finance
located across 15 major cities § High Yield / Leveraged Loans
worldwide. § Private Placement
§ Structured Products Real Estate
• More than 235 Investment Hedge Funds § Global, Country and Regional
§ Acquisition, Development and
professionals for Fixed Income. § Hedge Funds-of-Funds
Redevelopment
§ Relative Value
§ Long / Short § Core Plus, Value Added and
• 200 Private Equity professionals § Macro / Commodity Opportunistic
Trading Advisor § Office, Retail, Residential
located in 20 locations across the and Industrial
globe.

• Real Estate operations in 30 offices worldwide


with 500+ professionals.

Data as of 31 December 2006.

6
Global Perspective - Strategically Located Around the World

NORTH AMERICA EUROPE ASIA

Atlanta Barcelona Bangkok


Birmingham Berlin Hong Kong
Dallas Bucharest Jakarta
Hartford Budapest Jerusalem
Houston Dublin Kuala Lumpur
Los Angeles Istanbul Manila
Mexico City London Mumbai
New York Madrid Seoul
San Francisco Milan Shanghai
San Juan Moscow Singapore
Toronto Prague Taipei
Rome Tokyo
Vienna
Warsaw
Zurich

SOUTH AMERICA AFRICA AUSTRALIA

Buenos Aires Johannesburg Melbourne


Santiago Nairobi
São Paulo

More than 1,900 employees with over 450 investment professionals investing from 44 asset
management offices located worldwide enable us to understand and meet our clients’ needs.

Data as of 31 December 2006.

7
AIG in India

Launching
three new businesses
AIG Systems Solutions
(AIGSS) Incorporated
Joint Venture with 2007
American International AIG entered India Tata Group
Underwriters through its Private Equity 2002
business
+ Asset Management
(AIU) operated in India
until the General Insurance
Company
2001
Sector was nationalized – AIGSS is the offshore
+ Real Estate
in 1973
1997 – Tata AIG Life Insurance development center + Consumer Finance
Company Limited for AIG Group
Companies
1945 – Peak commitment
– Tata AIG General
– Over 500
Insurance Company
in India was to the Limited professionals
tune of USD 450 mn
– AIU acted as – It serves Insurance,
agents of Hanover Financial Services
Insurance Co. and and Retirement
New Hampshire Solutions business
Insurance Co. domains
– It had offices in
Mumbai, Kolkata
and New Delhi

AIG brings in $ 50 mn in capital into India to enable 100% ownership of its AMC business.
Employee strength for AIG businesses in India including joint ventures is estimated
to touch 6800 by end of 2007 from existing 4400.

8
Value Proposition in India – Replicating AIGGIG’s Global Standards

RIGOROUS RESEARCH EXPERIENCE


+ EPIC - Globally Integrated Equity + AIG founded in 1919 in Asia
Research Platform + Over 86 years of experience in
+ Brainpools, MAGIC, GAAC, FIAAT managing money
More than 450 investment + Over 86 years insight and
professionals with over 100 Equity understanding of Asia
professionals located across 15 cities
worldwide ALIGNMENT

+ As investors ourselves with capital


devoted to our own investment
GLOBAL PERSPECTIVE products, we share investment
RISK MANAGEMENT
+ EPIC enables worldwide knowledge objectives, responsibilities and + Given the heritage of our parent
sharing and global comparisons successes with our clients company’s insurance businesses, our
sensitivity to risk is embedded in
+ Investing from 44 asset management
exhaustive due diligence and
offices located across the globe
systematic portfolio controls, which
Using Local insight and knowledge to aim to expose the most profitable
drive investments risks for our portfolios
+ Senior Management committee
overseas all investments

Only An Investor Understands Another.


Data as of 31 December 2006.

9
II. AIGGIG’s Equity Capability

10
AIGGIG Global Emerging Markets Equity Composite Performance

Annualized Total Returns Peer Universe Ranking1


Gross Performance as of 31 December 2006 Gross Performance as of 31 December 2006

35.8 Rates of Return(%)


34.1
32.2 45
31.2
30.5
26.6
39

33

27

21
1 Year (%) 3 Years (%pa) 5 Years (%pa)
AIGEMG 35.9 (35) 34.1 (20) 31.2 (23)
MSEMFDTR 32.2 30.5 26.6

Dec-31-2006 Alpha Beta R-Squared Sharpe Standard Deviation Tracking Error Information Ratio

Trailing 3 yrs 3.26 0.98 97.91 1.79 17.44 2.53 1.42


AIGGIG Global Emerging Markets Equity Composite MSCI Emerging Markets DTR Net

1 Source: Mercer. This information is presented as supplemental data to the AIGGIG Global Emerging Markets Equity Composite presentation.
Reflects the preliminary gross performance of the AIGGIG Global Emerging Markets Equity Composite in U.S. dollars. Portfolio statistics are presented for the three year period ending
31 December 2006. The inception date of the Composite is 1 January 1996. The benchmark for the Composite is the MSCI Emerging Markets Daily Total Return Net Index from 1
January 1999 to date; and the MSCI Emerging Markets Monthly Total Return Gross Index from 1 January 1996 to 31 December 1998. Performance for periods of less than a year is
not annualized. Past performance in not indicative of future results.

11
Equity Philosophy

AIG Global Investment Group believes . . .

+ Over time, neither growth nor value investment styles will dominate the returns of the other.

+ Good companies in which to invest can be found across the universe of growth through value.

+ Metrics used to evaluate opportunities will vary based on the company’s stage of development.

+ A combination of quantitative and qualitative analysis, specific to each stock category, should be

utilized to help uncover attractive investment options.

AIG Global Investment Group’s competitive advantage stems from our global access to skilled
teams of investment professionals and our ability to uncover attractive investment opportunities

12
Equity Philosophy ... (Contd.)

1
Excess Return vs. Market Benchmark
30%

Excess Return vs. MSCI AC FE ex-Japan

10%

-10%

-30%
Dec 1997 Sep 2000 Jun 2003 Mar 2006

MSCI AC FE ex-Japan (Growth) MSCI AC FE ex-Japan (Value) MSCI AC FE ex-Japan

Over time, neither growth nor value investment styles will dominate the returns of the other.

1 Source: Zephyr StyleADVISOR

13
Investment Process Overview

. Index and appropriate non-index ideas


Total Investment Universe . A filter is applied based on:
> Liquidity
> Quantitative screening
> Idea generation

Growth Category Analysis . Exceptional Growth


. Stable Growth
. Cyclical Growth
AIGGIGs Research . Mature

. Buy/sell catalysts specific to growth category


Fundamental Analysis . Ranking (1-5) by % to fair value
Global Sector
Brainpools . Portfolio Construction:
> Stock rating and percentage to target price
> Liquidity
Portfolio > Risk monitoring/control

. Portfolio Monitoring:
> Target price, earnings revision alerts
> Periodic review
> Timely follow-up research

India Team currently covers 84% of BSE-500 Index by Market Capitalization

Data as of 15 April 2007.

14
Emphasis on Four Different Categories of Stock

EXCEPTIONAL HIGH STABLE HIGH CYCLICAL MATURE


GROWTH GROWTH GROWTH COMPANIES

INOX Leisure Infosys Tata Motors Indian Oil Corporation

Soundness of Growth at a reasonable price Value with a trigger


business plan Timeliness of investment

Categorizing companies allows analysts to concentrate on fundamentals that are relevant at a


particular stage of growth.

Stock categorization examples as of 31 December 2006. For illustrative purposes only. We are not soliciting or recommending any action based on this material.
There is no assurance that any security shown is held in a portfolio.

15
Platform for Fundamental Research – Evaluation Criteria

CATEGORY BUY CRITERIA SELL CRITERIA

EXCEPTIONAL • Business ideas likely to be successful • Facts emerge leading us to doubt success
  • Growth can be financed • Financing in doubt
  • Reasonable valuation if company succeeds • Valuation unreasonable

HIGH STABLE • Growth rate accelerating • Growth rate decelerating leading to negative
earnings revision trend
  • Consensus too pessimistic on growth rate • Profitability falling implying deterioration in
capacity for future growth
  • Valuation modest relative to history and peers • Valuation getting far away from historical trends
and peer groups

HIGH CYCLICAL • Underlying growth trend improves • Long-term outlook seen deteriorating
  • Cyclical outlook favorable • Cyclical outlook deteriorating
  • Positive earnings revisions • Negative earnings revisions
  • Valuation modest relative cyclically • Valuation expensive relative to position in cycle
adjusted growth trend

MATURE        
Turn-around • Confidence that turn-around is happening • Fully valued on realization of potential
  • Valuation attractive if turn-around materializes • Doubtful of turn-around being on track
Cyclical • Valuation attractive relative cyclically • Fully valued on cyclically normalized earnings
normalized earnings
  • Positive assessment of cyclical position • Doubts on cyclical outlook
Defensive • Fundamentally sound • Fundamentals deteriorating
  • Valuation attractive relative to own history and peers • Fully valued relative to own history and peers

16
Platform for Fundamental Research – Evaluation Criteria ... (Contd.)

CATEGORY BUY CRITERIA SELL CRITERIA

EXCEPTIONAL • Business ideas likely to be successful • Facts emerge leading us to doubt


success
 
• Growth can be financed • Financing in doubt
 
• Reasonable valuation if company • Valuation unreasonable
succeeds

17
Equity Platform for Investment Communication – The EPIC model

+ EPIC is AIGGIG’s in-house developed global Intranet-based knowledge system

+ 10 Year Historical data of companies & latest analyst estimates available online.

+ Complements and aligns AIGGIG’s Global Equity research process.

+ High degree of Automation – Email and updates are system generated.

+ Analysts continuously populate and update EPIC with their forecasts on multiple variables to reach a
consensus.

+ The Global Asset Allocation Committee (GAAC) and equity portfolio managers use the information in
EPIC to gain a comprehensive understanding of the companies.

+ The system allows the equity teams around the globe to function as a cohesive unit and “speak the
same language”.

18
Evaluation Report

Illustration Only

For illustrative purposes only. We are not soliciting or recommending any action based on this material.

19
Evaluation Report ... (Contd.)

Illustration Only

For illustrative purposes only. We are not soliciting or recommending any action based on this material.

20
Company Visit Log

Illustration Only

For illustrative purposes only. We are not soliciting or recommending any action based on this material.

21
The EPIC Advantage

+ Ensures analysis of all companies in a common EPIC format, enabling easy comparisons across
markets.

+ EPIC format ensures that analysts do a comprehensive review of the company fundamentals.

+ Enables analysts to perform a “Reality Check” by comparing their own estimates with sell side
analysts.

+ Helps reduce self generated biases.

+ Immediate sharing of “Relevant Information”. Enables automatic peer group review and
feedback.

+ Ensures Fund Manager Discipline as no company can be bought if not covered in EPIC.

+ Eliminates ad-hoc decision making.

+ EPIC keeps a record of all investment rationales, analyst updates and company visits for easy
review.

22
Examples of how EPIC and Brainpools benefit investment decisions

Illustration No 1

n Sesa Goa

Our Latin American counterpart who tracks the iron ore exporters came to the conclusion that iron ore shortage will
result in prices going up globally. One of the major iron ore importers is China. India started gaining market share in
China because of its close proximity and excess iron ore reserves in India.

Brainpool was organized to discuss this aspect. And we gave the only listed play Sesa Goa as a potential beneficiary.

The stock was then bought (~Rs 400) in late 2004 and by early 2005 a 71.5% hike in prices happened globally. Sesa Goa
by then had more than doubled to Rs 900. (Current price is ~ Rs1700)

Illustration No 2

n Ranbaxy vs Pfizer (Lipitor)

Lipitor (Cardiovascular) is the biggest drug sold globally. Ranbaxy had challenged the patent and Pfizer was defending it.

We exchanged mails with our US Pharma analyst who was tracking Pfizer and he gave us a feel of how they were
perceiving the trial.

A similar case was also evaluated (Dr Reddy vs Eli Lilly and the drug was Zyprexa) and AIG had investments in Eli Lilly.

23
Examples of how EPIC and Brainpools benefit investment decisions… (Contd.)

Illustration No 3

n Power Equipment makers (India and China)

In Mid 2005 Shanghai Electric Group Company, a power equipment maker in China was doing its IPO

We were consulted on how it stacks vis a vis BHEL. Since we had no idea about China we did some joint research and concluded
that the business models were different and were not comparable.

In late 2006 when the first UMPP projects were awarded it appeared as if BHEL was very uncompetitive against Chinese
equipment suppliers. Given the background information, we concluded that the market is mistaken and we added to our existing
large position in BHEL.

Now others on the street have after 3 months concluded exactly the same thing and the stock has recouped most of its losses and
has outperformed the market by 13% YTD.

Other Examples

n Palm oil, an important ingredient to make soaps, is imported from Malaysia. Our Malaysian colleagues tracking Palm oil
companies helped us to understand the cost pressure Indian companies like HLL would face.

n India has turned into an importer of coal and this information is beneficial to our regional colleagues as countries like
Indonesia, Australia and Africa are exporters of coal.

n Today India can import cement free of any taxes and this has a very huge impact. Using EPIC we can study companies in the
region whether exports can happen from there or not.

24
Investment Awards - Equities

AIG Japan Small Companies “Y” UCITS Fund AIG Japan Small Companies Fund plc
n Standard & Poor’s UK Fund Awards 2007- Awarded 1st place in the n Standard & Poor’s Investment Fund Awards – Taiwan (2006, 2004)
Smaller Companies Japan Sector over One Year (out of 25 funds) – Smaller Companies Japan in 3, 5, 10 years
AIG Global Emerging Markets “Y” UCITS Fund n Lipper Fund Award – Taiwan (2006, 2005) – Equity Japan Small
n Standard & Poor’s UK Fund Awards 2007- Awarded 1st place in the and Mid Caps in 3 years
Equity Global Emerging Mkts Sector over Five Years (out of 47 n Standard & Poor’s Investment Fund Awards – Taiwan (2005) –
funds) Smaller Companies Japan in 3, 5, 10 years
AIG Asia Balanced Fund n Lipper/ Banque de Luxembourg Wort Fund Award (2005)- Japan
n Lipper Funds Award Hong Kong (2006) – Mixed Asset USD Small and Mid Caps in 3,5,10 years
Aggressive in 3, 5 years AIG Europe Small Companies Fund plc
AIG International Funds – Acorns of Asia Balanced Fund n Lipper Fund Award – Taiwan (2005) – Equity Europe Small and Mid
n The Edge/Lipper Singapore Unit Trust Fund Awards (2006, 2004) – Caps in 3 years
Mixed Asset Singapore Dollar Balanced in 3 years n SCMP/Standard & Poor’s Fund Manager of the Year Awards (2003)
n The Edge/Lipper Singapore Unit Trust Fund Awards (2003) – Mixed –Smaller Companies Europe in 5 years
Asset Asia Pacific in 1 year AIG Latin America Fund plc
AIG International Funds – Japan Large Cap Equity Fund n South China Morning Post Fund Manager of the Year Award (2004)
n Benchmark/Lipper Fund of the Year Awards (2003) – Equity Japan –Equity Latin America in 3 years
in 3 years AIG South East Asia Fund plc
AIG International Funds – Singapore Equity n AsianInvestor Achievement Awards (2003) – Asia ex-Japan Equity
n AsianInvestor Achievement Awards (2006) – 10 year risk-adjusted Risk Adjusted Performance in 5 years
performance
AIG Small Cap Canadian Equity
n API Assessed Performance Money Manager Award (2003) – API
Canadian Small Cap Universe- Pooled in 1 year

25
III. India Outlook

26
BSE SENSEX Earnings

While market fears a slowdown Earning growth momentum has re-accelerated

60% 57% 80% % YoY Net Profit Growth

50% 70%
60% Ex-Energy
40% Ex-Financials
33% 34% 50%
28%27%
30% 24% 40%
20% 30%
20% 16%
10% 13% 20%
10% 6% Ex-Materials
4% 10%
0% 0%
-1% All Sectors
-1% -10%
-10%
-20%

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06
Dec-00

Jun-01
Sep-01
Dec-01

Jun-02
Sep-02
Dec-02

Jun-03
Sep-03
Dec-03

Jun-04
Sep-04
Dec-04

Jun-05
Sep-05
Dec-05

Jun-06
Sep-06
Dec-06
-20%
-17%
F1994

F1995

F1996

F1997

F1998

F1999

F2000

F2001

F2002

F2003

F2004

F2005

F2006

F2007E

F2008E

Source: Morgan Stanley Research, Company Data, E= IBES estimates

27
India Fundamentals

India Dominates ROE Performance Rising Capacity utilization is driving ROE

25% ROE Trend 2.2 24%


India's top 200 companies

2.0 22%
20%
India
EM Fixed asset turn (LS) 20%
1.8
15%
18%
1.6
10% 16%
1.4
14%
5% Asia Pac
ex-Japan World
1.2 ROE (RS) 12%
0%
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005
1.0 10%

F1995

F1996

F1997

F1998

F1999

F2000

F2001

F2002

F2003

F2004

F2005

F2006
Source: Morgan Stanley Research

28
India Overheating? Not as Hot as 1999

12%
Commercial Banks' Asset Yield
Curve (Spread over 1-Yr Bank F1999
10%
Deposit Rate)

8%
F2003
6%
Jan-07
4% F2004

2% Oct-05

0%

-2%
Average Mortgage Corporate Car Loan Truck loan Two-
10-year rates Loans* rates rates wheeler
bond yield financing
rates

Source: Morgan Stanley Research

29
SENSEX Valuations at last close 13,500

SENSEX FY04 FY05 FY06 FY07 FY08


P/E (x) 34.1 27.2 23.2 18.5 17.1
EPS (Rs) 369 463 541 681 790
EPS growth 25.3% 28.3% 18.1% 32.6% 16.0%
P/CEPS (x) 25.1 20.5 17.9 14.3 13.0
CEPS Growth (%) 18.0% 23.6% 15.7% 28.8% 13.2%
P/BV (x) 6.8 5.9 5.2 4.2 3.6
RoE (%) 21.3% 24.1% 24.4% 24.8% 23.4%
Cor Grearing (%) 21.5% 16.8% 16.5% 7.6% 4.1%
Dividend Yield (%) 0.9% 0.9% 1.2% 1.2% 1.5%
EV/EBITDA (x) 23.3 18.8 16.5 12.3 11.16

30
A Regional Comparison on Valuation and…

China
India
Malaysia
Singapore
Indonesia
Taiwan
Hong Kong
Philippines
South Korea
Thailand

2 4 6 8 10 12 14 16 18

Source: Merrill Lynch Research

31
Earnings Growth

40.0%
Low 35%
35.0% 33%
estimate 32%

30.0% at 13%
25.0% 21%
19%
20.0% 16%
15% 14%
15.0% 11%
13%

10.0% 7% 8% 8%
6% 7%
4% 3% 4%
5.0% 2%

0.0%
-5.0% -4%
-10.0%

India*

China

Indonesia
Singapore

Philippines
Hong Kong
Thailand

Malaysia

South Korea
Taiwan
* - FY07, FY08 CY06F CY07F

Source: Merrill Lynch Research

32
India has FII inflows in the region but domestic inflows remain small

Net FII Flows Equity MF Net Inflows

(Rs bn)
30,000 113.16
120.00 108.66
25,000
100.00
20,000
80.00 70.03
15,000 62.31
10,000 60.00

5,000 40.00
26.12
21.47
0 20.00 14.32 13.61
6.17 -0.68 7.80
India Indo Korea PhilippinesTaiwan Thailand -12.55 -4.47
(5,000)
0.00
(10,000) Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb-
-20.00 06 06 06 06 06 06 06 06 06 06 06 07 07
(15,000)

2007 YTD 2006 2005 2004 2003 2002 2001 2000

Though India has attracted FII Inflows, they remain modest & Domestic Inflows remain poor.

Source: UBS, AMFI

33
India’s stable growth makes it an attractive investment destination

+ World’s fourth largest economy on PPP-adjusted India’s GDP Growth Over Next Two Decades
GDP basis
3000
GDP ($ billions) 3000
+ Average GDP Growth of 6% over the last decade
8%
2000
+ Growth driven by domestic market
8% 1400 6%
1000 2100
+ Growth projected at 8% till 2020
6% 1150
650
+ Growth projected at 5+% over next 4 decades 0

• fastest among BRICs economies 2004 2014 2024

India’s World GDP Ranking 11 8-9 4-6

India’s growth has become less dependent on unpredictable factors like monsoons and agriculture,
and more dependent on competitive advantage of skilled workforce

Source:The BRICs Report – Goldman Sachs

34
IV. Liquidity to Drive Markets

35
India GDP – the 12th largest in the world today/ PPP 4th Largest

Country Market Capitalization Size of GDP


USA 16,979 13,262
Japan 4,901 4,463
Germany 1,731 2,890
China 1,148 2,554
United Kingdom 3,590 2,357
France 2,454 2,227
Italy 1,036 1,841
Canada 1,433 1,273
Spain 936 1,216
Russia 967 975
Brazil 670 966
South Korea 771 877
India 744 854
Mexico 323 811
Source: Bloomberg

36
India does not feature in MSCI World Index

  Market Cap. (US$ bn) Weight (%)   Market Cap. (US$ bn) Weight (%)

Australia 717 2.71 Japan 2,987 11.29

Austria 79 0.30 Netherlands 424 1.60

Belgium 156 0.59 New Zealand 19 0.07

Canada 932 3.52 Norway 118 0.45

Denmark 106 0.40 Portugal 45 0.17

Finland 188 0.71 Singapore 126 0.48

France 1,264 4.78 Spain 501 1.90

Germany 954 3.61 Sweden 323 1.22

Greece 83 0.31 Switzerland 875 3.31

Hong Kong 220 0.83 United Kingdom 2,938 11.11

Ireland 108 0.41 USA 12,810 48.43

Italy 477 1.80


Source: MSCI

37
India’s weight though increased in recent times is still low

  Market Cap. (US$ bn) Emerging Markets Asia Ex-Japan

China 1006 11.91 12.00

India 842 6.80 6.85

Indonesia 123 1.57 1.58

Korea 785 15.22 15.34

Malaysia 242 2.77 2.79

Pakistan 47 0.22 0.22

Philippines 69 0.52 0.53

Taiwan 644 12.67 12.76

Thailand 130 1.43 1.44

Source: MSCI

38
Foreign Flows to India

World Market Cap: USD 52 trn


India Market Cap: USD 804 bn, which is 1.5% of world market cap

Internal Increase in
FII Sectoral company limits Increase in FII allocation
Caps on foreign Free Float to Indian
ownership equities

+ Relaxation in Foreign + Indian companies can + MSCI uses Free Float to + Net FII Flows to GEM
Investment Limits across pass Special Resolution to determine the country funds in 2006: US$ 22.4
sectors increase internal FII limits weightages bn.
from 24% + India does not feature in + Net FII Flows to India in
MSCI World Index
+ Some of the companies 2006: US$ 8 bn.
that have increased FII + India accounts for a mere
Limit by passing a Special 6.8% in MSCI Emerging
Market Index
Resolution
+ Balrampur Chini Mills Ltd. –
From 40% to 60%
+ PTC India - From 24% to 40%
+ Aftek Infosys Ltd – From 30
per cent to 40 per cent
+ Hero Honda Motors From
24% to 40 per cent.
+ Reliance Industries From
24% to 49%
Source: UBS, SEBI

39
Indian GDP comparative to world majors: Goldman Sachs report

INDIA TARGETED TO OVERTAKE THE GDPs OF FRANCE AND UK IN LESS THAN TEN YEARS
Source: The BRICs Report – Goldman Sachs

40
India warrants a higher share in world indices

Weight age in
MSCI World Index
Italy: 1.80% France:4.78% UK: 11.11% Germany: 3.61% Japan: 11.29% US: 48.43% India: ??%

Italy France/UK*Germany Japan US


New India
Projection

Italy France/UK* Germany Japan


Old India
Projection

Cars indicate when BRICs US$GDP exceeds US$GDP in the G6

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: The BRICs Report – Goldman Sachs

41
India’s significant re-rating signals a departure from earlier trends

Big Rise in India’s Share of


India’s Share in GDP Rises Marginally
Market Cap Signifying Re-rating

25% 2.5% 18% 1.8%


India's share in World GDP (RHS) 16% 1.6%
India's share in EM Mkt Cap (LHS)
20% 2.0%
14% 1.4%

12% 1.2%
15% 1.5% India's share in Asia Pac Mkt Cap (LHS)
10% 1.0%

10% 1.0% 8% 0.8%


India's share in Asia Pac GDP (LHS)
6% 0.6%
5% India's share in EM GDP (LHS) 0.5% 4% 0.4%

2% India's share in World Mkt Cap (RHS) 0.2%


0% 0.0%
0% 0.0%
1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

1983

1985

1987

1989

1991

1993

1995
1997

1999
2001

2003

2005
Source: Morgan Stanley Research

42
Domestic Equity Flows

Floating stock of Indian equities Avenues % age of HH Savings


$ bn
A) Indian Market Capitalisation 704.8 Currency 8.8%
Less holdings with:
Bank Deposits 47.4%
B) Promoter Groups 455.1
C) FIIs 137.7
Shares & Debentures* 4.9%
D) Local funds & institutions 50.1
Equities with retail investors (Float) Claims on Government 14.7%
{A-(B+C+D)} 61.9
Indian GDP 850 Insurance 14.2%
Savings Rate (%) 28
Total Annual Domestic Savings 238 PF & Pensions 10%

+ With more and more young people getting into the investing class, the risk appetite will surely increase
+ India’s FY07 Est. GDP is at Rs 37,40,000 crores, avg. household savings out of this is 23%. i.e Rs 8,60,200 crores.
+ Of this an estimated 4-5% flows into Shares and Debentures, i.e. Rs. 43,010 crores.

Just an additional 2 % swing results in Rs 16,000 crores to equity markets

Source: BSE, Kotak Institutional Equities, RBI Annual Report (2005-06)

43
V. AIG India Equity Fund
An open ended equity scheme

44
Key Drivers for Investment Strategy: The India Story

A generation “ free from the guilt of


consumption” is driving consumption
Domestic Consumption
Rising affordability due to rising incomes
Rising penetration of retail lending

Projected spend on infrastructure over next 5


years – US$ 350 billion
Infrastructure Investments
Public- private partnerships mooted to build
physical infrastructure
KEY DRIVERS

BPO in IT and Pharma industries now well


established
Outsourcing
Knowledge Process Outsourcing in high end
functions in finance and bio-technology

Fall in trade barriers has increased competition


Global Linkages Driving Efficiency Indian corporates have improved efficiency to
attain global competitiveness

Financial services sector is channelizing savings


into investment opportunities
Rising Penetration of Financial Sector
Banking sector one of the strongest in the
region
Source: Goldman Sachs – Global Economics Paper No 152

45
AIG India Equity Fund - Investment Strategy

+ The Scheme would follow an actively managed approach allowing it the flexibility to pursue

opportunities across the entire market capitalization spectrum.

+ It will have no biases towards any particular style, sector or market cap.

+ It will continuously look across the value and growth spectrum to keep a balance in the portfolio so as

to maintain its performance over various market cycles.

46
AIG India Equity Fund

Investment Objective

The investment objective of the Scheme is to generate long-term capital appreciation from a diversified
portfolio of predominantly equity and equity-related securities including equity derivatives.

Asset Allocation Pattern

Instrument Range of Allocation Risk Profile


(% of net assets)
Equity and equity related securities 80% to 100% High
Debt & money market securities/
instruments/funds 0% to 20% Low to Medium

Benchmark Index
BSE 100

47
VI. Investment Team

48
Investment Team

Tushar Pradhan, CIO - Equities Huzaifa Husain, Fund Manager - Equities


(Over 14 years of experience) (Over 9 years of experience)

MBA, Finance - University of Hartford, West Hartford, CT B.Tech., IT - BHU, 1995


B. Com - R. A Podar College of Commerce and
PGDM - IIM Bangalore, 1997
Economics, Mumbai

Previous Assignments: Previous Assignments:


. Fund Manager - HDFC Asset Management Company . Portfolio Manager - Tata AIG Life Insurance
Ltd. (May 2004 - Dec 2006)
(Jul 2000 - Dec 2006) . Research Analyst - Principal AMC
. Manager, Treasury - HDFC Limited (Aug 2000 - Apr 2004)
(Apr 1995 - Jun 2000) . Research Analyst - SBI AMC
. Account Representative - First Investors Corporation, (May 1997- Aug 2000)
Wall Street, N.Y. (Jan 1994 – Dec 1994)
. Management Trainee - Metropolitan Life Larchmont,
N. Y.
(May 1992 - Dec 1993)

49
Investment Team ...(Contd.)

Deepak Joshi, Senior Manager - Dealing, Equities Ruchi Malhotra, Equities Analyst

B.Com, Pursuing MFM (Bombay University) PGDM (K.J.Somaiya), B.Com

Previous Assignments: Previous Assignments:


. Dealer – Principal PNB Asset Management . Analyst - JP Morgan Services India Private Limited
Company Pvt. Ltd. ( Sep 2004 - Dec 2006) (Jan 2005- Feb 2007)
. Dealer – Emkay Share & Stocks Pvt. Ltd. (Dec . Executive Trainee - ICICI Bank (Jun 2004- Jan
2003 – Sep 2004) 2005)
. AVP, Dealing & Operations – VAR Shares &
Stocks Pvt. Ltd., Swift Securities Ltd. (Jan 1992 Vinay Sharma, Equities Analyst
– Dec 2003)
PGDM (IIM Calcutta), B.Arch

Previous Assignments:
. Analyst - JP Morgan Services India Private Limited
(Dec 2004- Feb 2007)
. Management Trainee - UTI Bank (Jun 2004 - Dec
2004)

50
VII. Appendix
Disclosure Statement

51
i. Disclosure

Name of the Scheme: AIG India Equity Fund


Scheme Classification: An open-ended equity scheme.
Investment objective: The primary objective of the scheme is to generate long-term capital appreciation from a diversified portfolio of predominantly equity
and equity-related securities including equity derivatives.
Asset Allocation Pattern: Equities and equity related securities: 80%-100%; Debt and money market securities / instruments / funds: 0%-20%.
Terms of issue: Units of Rs. 10 per unit plus applicable entry load during the New Fund Offer (NFO) and at applicable NAV plus applicable entry load thereafter.
Offer document, Key Information Memorandum and Application Forms / Transaction Slips available at the ISCs / distributors.
Load Structure:
Retail Plan: Entry load: 2.25% for purchase of units less than Rs. 5 crore; Nil for purchase of units equal to or greater than Rs. 5 crore; Exit load: For investments
less than Rs. 5 crore - 1.00%, if redeemed within 1 year from the date of allotment; For investments of Rs. 5 crore and above - 0.50% if redeemed within 6
months from date of allotment.
Institutional Plan: Entry load: Nil; Exit load: 0.50% if redeemed within 6 months from date of allotment.
General Services: Investors can contact any of the ISCs at 1800 425 3444. NAVs will be calculated and published on all Business days.
Risk Factors: * The AMC has no previous experience in managing a mutual fund in India and the Scheme being offered in this Offer Document is the initial
Scheme being launched under its management. * Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss
in the Scheme or that the Scheme's objectives will be achieved. *As with any investment in securities, the NAV of the Units issued under the Scheme can go up
or down depending on various factors and forces affecting the securities markets. * Past performance of the Sponsor or mutual funds managed by the
Sponsor or its affiliates does not indicate the future performance of the Scheme. * Investors in the Scheme are not being offered a guaranteed or assured rate
of return. The Scheme does not guarantee or assure any dividend and also does not guarantee or assure that it will make any dividend distribution, though it
has every intention to make the same. All dividend distributions are subject to the investment performance of the Scheme. * AIG India Equity Fund is the name
of the Scheme and does not, in any manner, indicate the quality of the Scheme, its future prospects or returns. * Investments in the Scheme will be affected by
trading volumes, settlement periods, volatility, price fluctuations, inability to sell securities, disinvestment of holdings of any unlisted stocks prior to target
date of disinvestment, credit risk and interest rate risk. *The Scheme and individual Plan(s) with a separate portfolio, if any, under the Scheme shall have a
minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the Scheme/Plan(s). In case of non-fulfillment with either of
the above two conditions, specified SEBI Guidelines in this regard would be complied with.* Please read the Offer Document before investing.
Statutory Details: AIG Global Investment Group Mutual Fund (‘the Fund’) has been established as a trust under the Indian Trusts Act, 1882, sponsored by AIG
Capital Corporation (liability restricted to Rs. 1 lakh). AIG Trustee Company (India) Private Limited, a company incorporated under the Companies Act, 1956,
with a limited liability is the Trustee to the Fund. AIG Global Asset Management Company (India) Private Limited, a company incorporated under the
Companies Act, 1956, with a limited liability is the Investment Manager to the Fund.

52
ii. Disclosure ...(Contd.)

Readership: This document is intended solely for the addressee(s). Its content may be legally privileged and/or confidential.
Opinions: Any opinions expressed in this document may be subject to change without notice. We are not soliciting or recommending any action based on this material.
Risk Warning: Past performance is not indicative of future results. Our investment management services relate to a variety of investments, each of which can fluctuate in
value. The value of portfolios we manage may fall as well as rise, and the investor may not get back the full amount originally invested. The investment risks vary between
different types of instruments. For example, for investments involving exposure to a currency other than that in which the portfolio is denominated, changes in the rate of
exchange may cause the value of investments, and consequently the value of the portfolio, to go up or down. In the case of a higher volatility portfolio the loss on realization or
cancellation may be very high (including total loss of investment), as the value of such an investment may fall suddenly and substantially. In making an investment decision,
prospective investors must rely on their own examination of the merits and risks involved. AIG Global Investment Group (AIGGIG) comprises a group of international
companies which provide investment advice and market asset management products and services to clients around the world.
AIG Global Investment Group and AIGGIG are registered service marks of American International Group, Inc.
Unless otherwise noted, all information contained herein is sourced with AIG and/or AIG Global Investment Group internal data.
The content included herein has been shared with various in-house departments within the member companies of AIGGIG and/or AIG Private Bank Ltd., in the ordinary
course of completion. All AIGGIG member companies comply with the confidentiality requirements of their respective jurisdictions.
Parts of this presentation may be based on information received from sources we consider reliable. We do not represent that all of this information is accurate or complete,
however, and it may not be relied upon as such.
AIG Global Investment Corp. (Switzerland) Ltd. is a wholly owned subsidiary of AIG Private Bank Ltd.
AIG Global Investment Corp. (Europe) Ltd. is authorized and regulated by the Financial Services Authority.
AIG Global Real Estate Investment (Europe) Ltd. is an Appointed Representative of AIG Global Investment Corp. (Europe) Ltd.
Services and products are provided by one or more investment management subsidiaries of American International Group, Inc. (“AIG”).

AIG Global Investment Group Web Address: www.aiggig.com

53
Thank You

54
FCH House, Ground Floor

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