• In an effort to grow the investment portfolio for UHNI, True Beacon recently added a new general partner and co-founder, Abhijit Pai. Read the conversation with the co-founders of True Beacon here
Nikhil Kamath of True Beacon told Mint that investors should prepare for volatility going forward and IT, pharma and FMCG generally tend to do well. Talking about new-age tech stocks, he said he would not bet on them.
Meanwhile, to enhance the investment portfolio for UHNI (Ultra High Networth Individuals) and family offices, True Beacon has recently inducted a new general partner and co-founder, Abhijit Pai. He joins founding team members Nikhil Kamath and Richard Patel at the wealth management firm. Abhijit Pai is a second generation entrepreneur, a part of the family behind the Puzzolana Group. Pai and Nikhil Kamath also co-founded Grihas Proptech in 2021.
In an online video interview with Mint's Rakshita Madan, the trio talked about opportunities in Indian equity and private capital markets.
Here are edited excerpts from that interview:
Q. There are concerns around the world about a possible recession or recession in 2023. Is this a concern for you? Also, how do you see the market being at higher levels amidst such apprehensions?
Nikhil: So I'm quite skeptical. I think 21-22 times one year forward earnings, considering what's happening around the world, we're definitely in frothy territory. I guess one could argue that Europe is already in recession. The US definition is minus 1% for two consecutive quarters, most likely in the next quarter.
While India may steer clear of a recession, in a pure definition, in a way. But I think if you look at the inflation and the growth rate, and you know the GDP number last week was 6%. I'm feeling a little low, it would feel like a meltdown.
That's why I think the markets are expensive. But I have been feeling this way for a long time and I am wrong as the market continues to go up. So maybe I'm someone who sees the glass as half empty and most others are looking at that same glass and they see the glass as half full
Q. There has been a lot of volatility in the stocks of new tech firms that have been listed recently. What do you think is going on with those stocks? Any of them that you think are a value buy?
Nikhil: I will not buy them.
Q. Before we talk more about the secondary equity market in India, Abhijeet, can you tell us what your role will be and where you will be taking True Beacon?
Abhijeet: My main focus would be HNIs and family offices, intention would be to bring in private deals and syndicate partnerships, and would look at some unlisted capital etc. So we'll be adding to the suite of products that True Beacon already offers. So we will be having a holistic product portfolio on the money side with this edition.
Q. Richard, how are Indian markets looking for foreign investors?
Richard: India has outperformed many of its global peers over the past 18 months, be it in the US, UK, France, Germany, Singapore, Hong Kong, by between 10 and 45%, and that's a great testament to the equity markets . And I think, very attractive to international investors.
We, at True Beacon, are actually trying to mobilize some of these international investors who want to invest in India, and have always been looking at, you know, our major neighbor in China as an investment destination are in the form of and try to bring. India's equity capital market story for life.
But family offices are also looking for private opportunities in India.
Q. Nikhil, what are you looking forward to working on in the Indian markets in the short to medium term in the coming year?
Nikhil: I wish I knew. But in general, I think when there's market volatility, what's expensive gets hit the most and what's cheap does well, so if I had to turn to history, I'd say You know, maybe IT, Pharma FMCG these are the sectors which do well when there is volatility, but all that being said, most of the funds that we run are hedged.
If there is an uptick, we're going to be better than our competition that's out there. A lot of the funds in the market are just vinyl, long term funds that kinda like, you know, bet on companies that are going up all the time. We bet on relative value, and we bet you, strong companies doing well and big companies doing poorly with hedges all the time. That's what we do best in times of volatility.
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