Axis AMC and Inversion Collaborate for Turnaround Fund

Axis AMC and Inversion Advisory Services will collaborate to launch a Rs.3,500 crore fund to invest in stressed Indian companies that have the potential to turn around their performance and become multi-baggers over time. The structure will be an Alternative Investment Fund (AIF) and will be managed by Axis Asset Management Company.

Inversion Advisory is floated by Akhil Gupta with a functional team to do granular studies on such investment opportunities. Akhil Gupta needs no introduction in corporate circles. He is on the board of Bharti Enterprises and was one of the driving forces behind the launch of Bharti telecom services in India. He is also credited as the force behind the multi billion dollar acquisition of Zain of Africa by Bharti.

The fund raising under the AIF will have a base amount target of raising Rs.3,000 crore with a Greenshoe option to retain another Rs.500 crore based on the discretion of the fund managers. The fund is proposed to be sector agnostic and will not have any specific sectoral preferences. The identification of such opportunities will be done based on a well-refined, fine-tuned and back tested model.

As part of the strategy of the turnaround fund, it will predominantly invest in picking controlling stakes in pre-stressed, stressed, distressed as well as other underperforming assets. The focus will be on companies that have the potential for a turnaround given the right funding support and management bandwidth. Obviously, being a stressed assets fund, the investment perspective will be longer term.

The unique feature of the turnaround fund will be that it will not just be a passive investor. Mutual funds tend to be passive investors in any company. However, this turnaround fund will not only take an equity stake but also mentor the promoters, help them raise finance and also help them recruit the right talent to catalyse the turnaround of the company. The focus will be companies where the stock price is divorced from the turnaround potential.

The fund, if successful, will fill a long standing gap in the market. The turnaround ecosystem for stressed assets in India has been largely debt driven. If this experiment succeeds, it will also create the right equity ecosystem for turnarounds. After all, there is a huge appetite among risk-taking investors for these kind of asset classes.