Hastings Funds Management (Hastings), the Melbourne-based fund manager, has entered a “strategic alliance agreement” with Indian conglomerate Aditya Birla Group to provide a range of infrastructure investment initiatives.
The alliance will see Hastings develop a permanent presence in Mumbai and represents the formalising of an existing relationship between the two firms which have worked together for the last couple of years.
A Hastings statement said that the first initiative stemming from the alliance would be focused on India-based infrastructure debt in operational projects.
In the statement, Hastings described India as a “major focus” of its Asian strategy along with South Korea, Japan, China and Southeast Asia.
In a keynote interview with Infrastructure Investor for the upcoming May 2014 issue, Hastings chief executive Andrew Day said that, up until now, the focus for Hastings has been on “taking Asian capital and investing it in OECD assets”.
“But in time,” he added, “we expect a growing appetite to invest in emerging markets and we watch that with interest. From our Australian base, we have a geographic proximity to Asia and three of the four largest countries in the world are in the region with big populations and fast growth. It’s the next frontier and we’re keen to form partnerships based on trust and respect.”
The statement pointed out that Hastings brings “significant infrastructure and debt experience” while Aditya Birla has “extensive asset management experience” through asset manager Aditya Sun Life and “experience in investing in the infrastructure sector in India” through financing arm Aditya Birla Finance.
Hastings believes Indian infrastructure debt offers “attractive long term risk adjusted return given the cost of debt is likely to be high due to the effects of inflation and capital constraints on the Indian banking system”.
The statement said the two firms were working “closely” with the Indian regulator, the Securities & Exchange Board of India, project sponsors and commercial banks to provide investors with access to opportunities.
Hastings is based in Melbourne with a presence in Sydney, Singapore, London and New York and A$7.4 billion (€5.0 billion; $6.9 billion) under management on behalf of 70 institutional investors. It launched its first equity fund in 1994 and first debt fund in 1999.
Aditya Birla has multiple enterprises – including in financial services – in 30 countries around the world and generates annual revenues of $40 billion. It is the third-largest private sector Indian conglomerate behind Tata Group and Reliance Industries.