Embed Size (px)
DESCRIPTION
Baroda Pioneer Infrastructure Fund
Citation preview
India’s futurehinges on
three main catalysts
Ab
ility
to
en-
cash
our
dem
og
rap
hic
adva
ntag
e
Agric
ultu
ral
outp
ut to
mee
t
burg
eoni
ng d
eman
dB
uilding infrastructure
to deliver inclusive
growth
2
Infrastructure - There is no alternative
• Linkage between infrastructure development and economic growth is a well established fact
Sustained economic growth after the initial euphoria can only be managed through infrastructure investment
As poorer nations begin to grow the deciding factor that attracts much needed capital is the infrastructure -
China is far ahead of India on this parameter
Correcting historical imbalances needs implementation of an affirmative action plan for infrastructure
development
Economically unviable natural resources can be made viable through development of infrastructure in those
locations
Infrastructure is now a surrogate for economic growth and is increasingly seen by the political establishment as a
means to retain and remain in power
•
•
•
•
•
3
Infrastructure - Sweetening the mix
India’s Economic Growth @ 7%
•
•
•
•
Largest pool of employable talent under the age of 30
Low cost manufacturing and service destination
Large population with an appetite for consumption driven lifestyle
Stable economic & political environment
India’s Commitment to build world class infrastructure
•
•
Basic infrastructure for all – power, roads, water
Advanced infrastructure – high speed road and rail network, wireless broad band
India grows @ 10% - every 1% spent on infrastructure could add 1% to the GDP says World Bank
4
India vs. China - Miles to go
Source: CIA World Fact-book
India China
Area ( Sq Km) 3,287,263 9,569,961
Population Density (per sq km) 355 140
Road- Expressways 320 41,005
Airports 349 482
Power Generation Capacity (GW) 150 793
Power Consumption - per capita ( Kwh) 487 2,272
Steel Consumption - per capita ( kg) 38 338
Cement Consumption - per capita ( kg) 154 1,084
5
India vs. China - Learning from them
•
China has always used infrastructure investment as a means to bolster their growth e.g.- large infrastructure
spends from the stimulus package in 2009 helped the economy grow at a rate close to 9% in a very difficult year
China’s infrastructure has been built on a series of interconnected economic needs unique to them e.g. -
development of world class infrastructure around its special economic zones to facilitate quick movement of
goods from factories to its ports
Holistic investment with an eye on future needs has meant that China has pumped in massive funds to finance
their infrastructure needs e.g. China plans to spend nearly $4.5 trillion on energy infrastructure alone between
2010 and 2030
Infrastructure has not been a matter of choice, but of need – insurance against political unrest in a large
unmanageable country, gaining competitive advantage over the fast growing neighbours etc.
While it is easy to dismiss the Chinese model as totalitarian, there are several sound economic reasons for its
success
•
•
•
•
6
“Infrastructure” - The story unfolds
7
• P1
• P2
• P3
- Planned allocations for infrastructure in the XI edition at unprecedented levels
- Public-Private partnership model for development
- Political will cutting across party lines
Indian Infrastructure - 3Ps
8
Indian Infrastructure - 3Ps
Eleventh Plan310
6665
169
2533880
2618
3142
224
2584
1437Airports
Electricity
Gas
Irrigation (incl. WD)
Ports
Railways (incl. MRTS)
Roads & Bridges
Storage
Telecom
Water Supply and Sanitation
Rs. bn
Tenth Plan
68
2919
97
11151411197
1449
48
1034
648
9
0
1000
2000
3000
4000
5000
6000
7000
0
1
2
3
4
5
6
7
8
9
10
Investment in infrastructure 2252.46 2702.73 3215.79 3892.67 4791.17 5959.13
Infra Investment as %of GDP 5.43 5.98 6.53 7.25 8.19 9.34
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Rs
. b
n
%
Infrastructure investment projected to dominate the capex mix
Source: Plan document - Panning Commission
Infrastructure - The big theme
10
Indian Infrastructure - Improved outlook for execution
•
•
•
•
•
Planning commission has projected massive USD 421 bn of infrastructure investments in XI plan (FY08-12) (3 x X
plan investments) - we expect USD 300 bn of infrastructure investments in XI plan, still commendable ( 2.3x X plan
investments)
While quantity of projects is not an issue, execution and viability of these projects has improved since the UPA
government was elected in mid-2009
The major focuses for the spending are power (32% of total spending), highway (15%), railways (13%)
Government financing of the projects remains critical, as 70% of the entire infrastructure plan is publicly financed
However, use of public-private partnership (PPP) structures is increasing for new projects, and liquidity has returned
to the market for both equity and debt financing
11
PPP - The way forward
•
•
•
Of the XI plan investment of Rs 20.5 tn, 30% is expected from private participation as against 20% in the X plan
Private participation requires financial as well as operating resources to execute various infrastructure projects in a
more speedy and innovative manner
We expect the project to be expedited after a lull in FY’09 because of:
A marked improvement in the Indian economy along with reviving global cues
Incentives introduced for the PPP model
A softer interest rate regime leading to easier access to liquidity and a interest burden (a key concern since
projects are funded by debt to the extent of 70–80%)
Policy measures initiated to unplug the bottlenecks to project execution (mainly in the roads segment), which
have been a principle cause of delays in project awards
Measures to unlock liquidity introduced in the two stimulus packages
Softening of commodity prices
•
•
•
•
•
•
12
Infrastructure - Opportunities exist across all verticals
•
•
•
•
•
•
•
Power
Roads & Bridges
Railways
Irrigation
Airports
Ports
Oil & Gas
13
Source: Capital Line
Company Details FY – 2004 (Rs. mn) FY – 2009 (Rs.mn) CAGR Growth (%)
BHEL
Net Sales 72640 193654 22
PAT 6944 28592 33
Market Cap 147957 736409 38
L&T
Net Sales 109471 403712 30
PAT 7354 29340 32
Market Cap 14290 393971 94
IVRCL
Net Sales 7766 50741 46
PAT 419 2259 40
Market Cap 2206 16227 49
Nagarjuna Construction
Net Sales 7575 41367 40
PAT 314 1544 38
Market Cap 314 1544 38
Some case studies
14
Companies playing the infrastructure theme
Source: Internal Compilation
15
PresentingBaroda Pioneer Infrastructure Fund
NFO: 3 May - 31 May 2010
16
Scheme top-lines
•
•
•
•
•
Baroda Pioneer Infrastructure Fund offers one of the prime catalyst for India’s growth - “Infrastructure” as a theme for investors
The scheme as a part of its investment strategy will endeavor to create a core infrastructure portfolio
Offers the investor an opportunity to benefit from the growth potential of all sectors under the “Infrastructure” umbrella
A right time investment as companies in the infrastructure space offer good value from a long-term perspective
The benchmark of the scheme is CNX 100*
17
Scheme Basics
Investment Objective:
Asset Allocation:
The primary investment objective of the Scheme will be to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of companies engaged in infrastructure and infrastructure related sectors.
Under normal circumstances, the broad investment pattern will be as under.
Instruments % of Total Assets
Equities and equity related securities including derivatives engaged in 65-100infrastructure sectors and infrastructure related sectors*
Debt and Money Market Instruments 0-35
*Investment in derivatives may be made upto 50% of the net assets of the Scheme.
The exposure/investments of the scheme in Equities and equities related instruments + notional exposure of derivatives + debt and money market instruments shall not be more than 100% of the net assets of the scheme.
18
Scheme Features
Features
Risk Profile of the Scheme
•
•
•
•
•
Investment Plans/ Options : Growth and Dividend
Unit offer price : Rs. 10 per unit
Entry Load : Nil
Exit Load : 1.00% if redeemed on or before 365 days from the date of allotment of units, Nil if redeemed after 365 days from the date of allotment of units
Minimum investment : Rs. 5,000 and in multiple of Re. 1 thereafter
Benchmark : CNX 100*
Risks associated with companies operating in the Infrastructure Sector
Equity instruments carry both company specific and market risks and hence no assurance of returns can be made in respect of these investments
Equity and equity related securities are prone to daily price fluctuations and the liquidity of investments made in the Scheme
Risk associated with investment in Fixed Income and Money Market instruments which may involve Interest Rate risk, Spread risk, Credit risk or default risk, Liquidity & Settlement risk, performance risk, prepayment risk and market risk etc.
Risk associated with investment in Derivatives which involve Credit Risk, Illiquidity Risk etc.
19
Industries where we will invest
Cement Industrial Products
Construction Minerals & Mining
Construction Projects Non Ferrous Metal
Engineering Oil
Ferrous Metals Petroleum Products
Financial Institutions Power
Gas Telecom Equipment & Accessories
Industrial Capital Goods Telecom Services
Transportation Housing Finance
20
Equity investment process - Integrating three pillars of investment specialists
Buy Discipline
•
•
•
Define investment case
Identify discount
Construct Portfolio
Sell Discipline
•
•
•
Target price reached
Story changes
Better opportunities
Quantitative Analysis
•
•
•
•
•
31 global quant equity analysts
Stock screening & idea generation
Strategy Back-test
Performance monitoring
Risk control
Fundamental Analysis
•
•
•
•
•
45 global equity analysts
Career Analysts
Extensive company contacts and research coverage
Valuation
Idea generation/Sponsor stocks
Portfolio Management
Supporting a global range of products through an aligned investment process
21
Investment approach
The key factors of the investment strategy of the scheme will be :
•
•
•
•
•
•
Top-down economic and market research to provide a strategic direction for our sector allocation
Indentifying attractive opportunities on the basis of the government policies research report and overall economic conditions
The stock selection will take into consideration of various factors like Fundamentals of the business, Market Capitalisation Industry structure, Quality of management, etc.
Sector weightage and stock selection within the sector
Our equity analysts conduct bottom-up fundamental research into stocks to assess management quality, competitive positioning and growth potential
The portfolio will be sufficiently diversified by investing in number of companies without any restriction of market capitalization
22
About Baroda Pioneer
•
•
•
•
Baroda Pioneer Asset Management Company Limited is a joint venture between two large and well-established financial services companies - Bank of Baroda and Pioneer Investments
Baroda Pioneer Mutual Fund is positioned to serve the varied asset management needs of investors in India through a range of equity, debt and money market offerings
Since the formation of the joint venture in 2008 Baroda Pioneer has have been working relentlessly to create an operational and servicing platform well suited to the exacting requirements of our existing and potential investors
Baroda Pioneer Mutual Fund is amongst the fastest growing asset management companies in India with assets of about Rs.2,984 Cr. (as on 31 Dec’09). The company operates out of 14 locations in India
23
Risk Factors
Disclaimer: *Baroda Pioneer Infrastructure Fund is not sponsored, endorsed, sold or promoted by India Index Services & Products Limited ("IISL"). IISL does not make any representation or warranty, express or implied, to the owners of Baroda Pioneer Infrastructure Fund or any member of the public regarding the advisability of investing in securities generally or in Baroda Pioneer Infrastructure Fund particularly or the ability of the CNX 100 Index to track general stock market performance in India. The relationship of IISL to the Issuer is only in respect of the licensing of certain trademarks and trade names of its Index, which is determined, composed and calculated by IISL without regard to the Issuer or Baroda Pioneer Infrastructure Fund. IISL does not have any obligation to take the needs of the Issuer or the owners of Baroda Pioneer Infrastructure Fund into consideration in determining, composing or calculating the CNX 100 Index. IISL is not responsible for or has participated in the determination of the timing of, prices at, or quantities of Baroda Pioneer Infrastructure Fund to be issued or in the determination or calculation of the equation by which Baroda Pioneer Infrastructure Fund is to be converted into cash. IISL has no obligation or liability in connection with the administration, marketing or trading of Baroda Pioneer Infrastructure Fund.
Investment Objective: Baroda Pioneer Infrastructure Fund - The primary investment objective of the Scheme will be to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of companies engaged in infrastructure and infrastructure related sectors. Asset Allocation Pattern: 65-10% Equities and equity related securities including derivatives engaged in infrastructure sectors and infrastructure related sectors. 0-35% Debt and Money Market Instruments Load : Entry Load - Nil, Exit Load : - 1% if redeemed on or before 365 days. Terms of Issue and sale & redemption of units: Issue of units of Rs. 10 each for cash during the new fund offer and at NAV based price during the ongoing offer. The scheme offers sale and redemption facility on all business days during the ongoing offer. The NAV of the Scheme would be calculated for all business days. The SID & SAI / Key Information Memorandum cum Application form are available at AMC and Registrar Office and Investor Service Centres/ the AMC website www.barodapioneer.in/ Distributors. Statutory Details: Baroda Pioneer Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Pioneer Global Asset Management S.p.A and Bank of Baroda. Trustees: Board of Trustees of Baroda Pioneer Mutual Fund. Investment Manager: Baroda Pioneer Asset Management Co. Ltd. Risk Factors: Baroda Pioneer Infrastructure Fund is only the name of the Scheme and does not in any manner indicates the quality of the Scheme, its future prospectus or return. All Investment in Mutual Fund and securities are subject to market risk and there is no assurance or guarantee that the objective of the Scheme will be achived. The NAV of the scheme can go up or down depending upon the factors and forces affecting the capital market. Past performance of the scheme, the sponsors or its group affiliates are not indicative of and do not guarantee of future performance of the scheme. The sponsor is not responsible or liable for any loss resulting from the operation of the scheme beyond their initial contribution of Rs. 10 lacs towards setting up of the Mutual Fund and such other accretions and additions to the corpus. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Investor will be advised to refer to the details in the Statement of Additional Information and independently refer to his tax advisor.
Contact Points:Baroda Pioneer Asset Management Company Ltd.501 Titanium, 5th Floor, Western Express Highway, Goregaon (E), Mumbai - 400063. Phone: +91 22 3074 1000 / 4219 7999. Fax: +91 22 3074 1001.E-mail: [email protected]. Website: www.barodapioneer.inToll Free No: 1800 419 0911
