Alternative Investment

Alternative investments are a position in something other than a long position in either equity or debt. Generally speaking, the alternative investment markets encompass hedge funds, venture capital and private equity, real estate, and managed futures. These securities include positions that define investment strategies within these broad groupings.

Alternative assets are a subset of existing asset classes. For example, a hedge fund may be organized as a private company that takes both long and short positions in equity securities, seeking to expand the investment opportunity set available to long-only equity managers. These opportunities include capital appreciation, hedging, and diversification, etc.

Real Estate - An Investment with Confidence:

GIIS Financial clients avail benefit from operations, policies and a culture that are specifically designed to maximize value for each property with the highest degree of professionalism while taking decision for investment in real estate. We provide a wide range of advisory and consulting services to some of the most prominent real estate investors in the country, including Individual, Developers, REITs, High Net-worth Individuals, Pension Fund Advisors and other institutions. Our advisory services include: • Asset Analysis and Opinion of Value

• Property Operations Analysis

• Specific Asset Buy-Sell Strategy

• Market and Submarket Analysis and Ranking

• Portfolio Strategy by Property type

• Development and Redevelopment Feasibility Studies

The eventual aim of GIIS Financial is to bring our clients best-in-class, with best fit solutions designed to deliver maximum results that reflect individual situations. By appreciating these individual situations, we can help clients decide on a customized portfolio with the available banking services. Prestigious property in different location in country continues to be an attractive investment for our clients.

There are three phases of the purchasing process that we carry out: Sourcing, Financing and Structuring. GIIS Financial is able to widely assist our clients through the entire process of investing in property. Our real estate service pulls the capabilities of self as well as those from third party consultancies to ensure that we are perfectly placed to support our clients with their real estate purchases.

  • Sourcing

    We work with some of the leading property, search and acquisition consultancies across India with a focus on properties in all A rating (Metros) B rating (semi metros) C rating fastest developing cities. Through these consultancies we are able to offer exclusive negotiations, managed sales and property management services to our clients. Working with these consultancies, clients have the opportunity to pull off a range of benefits:

    1. Genuine client service tailored to personal requirements: A complete understanding of our clients’ requirements is undertaken so that a property that meets exact specifications

    2. Industrious team of expert negotiators to secure the most attractive price All property deals are undertaken with a fundamental appreciation of value.

    3.Independence The consultancies are independent and are not owned or part of another estate agent. Advice, which is provided by highly experienced industry specialists, is impartial.

    4. Surge to exclusive opportunities A large proportion of properties are sourced for clients independently of the open market.

  • Financing

    For clients involved in purchasing property or real estate investing, we are able to arrange assistance with competitive mortgage terms and rates. We work with individuals to assess borrowing requirements and arrange the finance agreed in principle from financial institution before

    finalizing any property acquisition. We are able to arrange financing on properties that will be used for the following purposes:

    1. Buy to let
    2. Investment property
    3. Holiday homes
    4. Indian residential mortgage contracts
    5. Equity release
    6. Refinancing

  • Structuring

    When making a real estate investment, it is often important that clients work with an estate advisor who has the expertise to create and manage a trust or structure that is appropriate for their individual needs. For clients who reside outside of the India it can be particularly important, as the use of a trust or company structure to hold real estate investments can ensure the smooth succession of such assets to future generations. GIIS Financial offers a highly personal approach to wealth management with a focus on seamless service. Our fiduciary specialists can work with a client’s advisor if requested.

    A variety of structures are available for consideration. Services can be used to provide the flexibility clients require in estate planning, such as improved privacy as well as to safeguard assets. Based on a consultative approach, a Relationship Manager and Fiduciary Specialist, together with the trust company, guides clients through the process of tailoring a structure best suited to meet their fiduciary and investment goals. With the assistance of our fiduciary specialists, GIIS Financial is here to help our clients preserve, grow and distribute their wealth according to individual, business, financial and personal needs.

Add Real Estate to Your Investment Portfolio: Any ethical professional will insist that the first rule of investing is to diversify your portfolio. Generally not more than 30% of available investment funds should be allocated to any one category. Stocks, bonds and other savings instruments usually form one leg of a many branched platform. Direct commodity investing is a highly risky venture, usually safe only for the savvy investor who has time to closely monitor the market. Options, commodity oriented mutual funds and other indirect investments are less risky, but still far from wise for the average person.

Owning real estate in different forms:

  1. Sole owner – Any property solely owned by single or with family member.
  2. Units in Real Estate Investment Trust.(REITs) - REITs are entities that invest in real estate related assets, such as shopping centers, office buildings, hotels, and mortgages secured by real estate.
  3. Real Estate Mutual fund - This is a sector oriented fund by Mutual fund houses. The fund is used for investing in the share of the companies engaged in real estate business. GIIS Financial Advisors can help you to find the exact form of your holding in real estate, based on your investment need and liquidity requirement.

Investment in excellent art and antiques are very expensive and usually not an option for the small investor. Art and antiques are not a "liquid" investment. This means that they generally cannot be resold quickly for a profit. One reason is that the market for these items moves on ebbs and flows. If you need to sell your items quickly and the market is down, you could even incur loss of money. Also, while you will pay retail price when you buy, you probably will sell at a wholesale price or lower. To make a profit, you need to keep your items until their value increases enough to make up the difference. In the art and antiques markets, this usually is a very long time.

Why should I invest in Art & Antique?

On a positive note, art and antiques have an immediate and practical advantage over other types of investments. They can be used to help furnish a home. To some, art and antiques provide an aesthetic element or simple comfort to an interior. For others, art and antiques offer an ancestry look in the home.

Globally, art funds are very famous as an alternative class of investments for rich investors and have started gaining some ground in India over the past few years. However, there are no specific regulations in India for art and other such funds, which collect money from numerous investors, most of whom are high-net worth individuals to invest them into art works, antique pieces as also old and rare coins and stamps.

What are the guidelines that the investor needs to follow?

SEBI is soon going to begin a consultation process with various stakeholders, including the central government and RBI, with an aim to frame the specific regulations for these alternative investment vehicles this fiscal. We have an honor to be a member in the same.

As per the existing regulations, only an entity registered with SEBI as a Collective Investment Management Company is allowed to offer any collective investment fund or scheme, including those focused on art works.

However, there are no specific regulations for art funds and the need has been felt now to have a distinct set of rules for such investment vehicles, the official added.

Globally, alternative investment avenues are quite in vogue among riche-rich investors, who are estimated to allocate 5-10 per cent of their investment portfolio into these products.

As per the annual World Wealth Report of Cap Gemini and Merrill Lynch Wealth Management, alternative investments are expected to account for nearly 9 per cent of High Net-worth Individuals (HNIs) in the Financial Assets in 2011.

What are the basic rules for investing?

Before buying art and antiques for investment purposes, keep the following basic rules in mind:
  • Limit the field of your investment collection. Risk is reduced by information. It is not so important what you wish to collect but that you like it and wants to learn about it. Read everything you can collate about your specific area of interest. Consult museums, design centers, universities, other collectors or dealers in your specialty, trade journals, magazines, books and related associations.
  • Find a service provider like GIIS Financial who can help you to connect with reputable dealer who has been in the business for many years -- long enough to know about quality, market trends and pricing practices in the field in which you want to collect/invest.
  • Buy top quality. Top-quality items are costlier; however, they tend to appreciate even in poorer market times. Medium-quality items often do little more than keep pace with inflation. Limit yourself to a field in which top quality is within your budget arena.
  • Obtain a written appraisal or certificate from a leading appraiser or certifier in your field attesting to the quality and authenticity of the item.
  • Maintain the item properly with appropriate environmental conditions and regular maintenance. If repairs are required, they should be made only by well-trained experts.
  • Insure the item adequately. GIIS Financial can help you to get connected with the right company for appropriate insurance. Most homeowner policies allow for fire and theft but not natural disasters, such as floods or accidents. Have your works included on a scheduled form of all risks for coverage in the event of theft, fire or breakage.
  • Make a detailed plan for disposal. Your attorney or estate manager may not be sensitive to the value or importance of your investment collection.
  • Avoid putting more than 10 percent of the value of your investment portfolio into art and antiques. Most authorities agree that exceeding this limit may subject your entire investment program to a high level of risk.

Private Equity Investment:

Private equity is often categorized an "alternative investment", comprising a variety of investment techniques, strategies and asset classes that are complimentary to the stock and bond portfolios traditionally used by investors.

Private equity investing may broadly be defined as "investing in securities through a negotiated process". The majority of private equity investments are in unquoted companies. Private equity investment is typically a transformational, value-added, active investment strategy. It calls for a specialized skill set which is a key due diligence area for investors' assessment of a manager. The processes of buyout and venture investing call for different application of these skills as they focus on different stages of the life cycle of a company. Private equity investing is often divided into the categories described below. Each has its own subcategories and dynamics and whilst this is simplistic, it provides a useful basis for portfolio construction.
Investment categories

What are the principal means of Private Equity Investment?

The principal means of private equity investment are:

• Investing in private equity funds.

• Outsourcing selection of private equity funds.

• Direct investment in private companies.

Means of investing

While it is sometimes the ultimate objective of investors to make direct investments into companies, compared with investing through funds it requires more capital, a different skill set, more resource and different evaluation techniques. Whilst this can be mitigated by co-investing with a fund and the rewards can be high, there is higher risk and the potential for complete loss of invested capital. This strategy is recommended only to experienced private equity investors. For most investors the use of private equity funds would be preferred.

What are the main sources of private equity finance?

The range of investors in private equity has expanded rapidly that includes different types of investors with significant long-term commitments to the asset class. The majority of commitments to private equity funds are based in respective geographical regions. This is evolving as investors seek a higher level of geographical diversification in their private equity portfolios.

Why Invest in Private Equity?

The basic reason for investing in private equity is to improve the risk and reward characteristics of an investment portfolio. Investing in private equity offers the investor the opportunity to generate higher absolute returns whilst improving portfolio diversification.
These characteristics can attract you to invest in Private Equity:
  • Long-term historical out-performance
  • True stock picking in a low inflation, low growth environment
  • Exposure to the smaller companies market
  • Access to legitimate inside information
  • Ability to back entrepreneurs
  • Influence over management and flexibility of implementation
  • Leveraging off balance sheet

Venture Capital Investment:

Seeing the current scenario, India is becoming a viable country for venture capitalists and entrepreneurs alike to start a business and to secure venture capital. Through equity financing, or stock issuing, entrepreneurs don’t have to worry about making monthly debt payments to banks, and instead share part ownership of their company in exchange for capital.

Venture capitalists can invest anywhere from Rs.10,000 up to the billions, expecting a return of up to 30% over a five to ten year period. At the earliest stage of investment, this funding is called seed capital, covering initial marketing, developing and manufacturing expenses.

After several years, even if the business has not yet turned a profit, the company can seek working capital to further expand its line of products, operations, inventories and technologies. When the company or firm has matured, this bridges the gap for company to go to public and to investors. Here, they can restructure stockholder positions and possibly exit their agreement (also known as an “exit strategy”).

What kind of investors are venture capitalists?

Venture Capitalists are professional investors who are specialized in funding and building young, innovative enterprises. Venture Capitalists are long-term investors who take a hands-on approach with all of their investments and actively work with entrepreneurial management teams in order to build great companies.

Where do venture capitalists get their money?

Most venture capital firms raise their "funds" from institutional investors, such as pension funds, insurance companies, endowments, foundations, family offices, and high net worth individuals. The investors who invest in venture capital funds are referred to as "limited partners." Venture Capitalists, who manage the fund, are referred to as "general partners." The general partners have a fiduciary responsibility to their limited partners.

What are the opportunities available for VC in India?

  • High Growth in Technology and Knowledge based Industries (KBI)
  • KBI growing fast and mostly global, less affected by domestic issues.
  • Several emerging centers of innovation – biotech, wireless, IT, semiconductor, pharmaceutical.
  • Ability to build market leading companies in India that serves both global and domestic markets.
  • India moving beyond supplier of low-cost services to higher-value products.
  • Quality of entrepreneurship

How many venture capital firms are there in the India?

There is more then hundred VC from India and abroad have started their business in India from year 2000 onwards, few of the recognized are as below. These are venture capital companies in India.

  • Accel Partners India ,Artheon Ventures, Artiman Ventures, August Capital Partners
  • BlueRun Ventures
  • DFJ India
  • Epiphany Ventures
  • Helion Venture Partners
  • IFCI Venture Capital Funds
  • India Innovation Investors
  • Inventus (India) Advisory Company
  • JAFCO Asia
  • Netz Capital
  • Nexus India Capital
  • Ojas Venture Partners
  • Reliance Venture
  • SAIF Partners
  • Trident Capital
  • VentureEast

What types of companies and industries do venture capitalists invest in?

Venture Capitalists invest mostly in young, private companies that have great potential for innovation and growth. Today, the majority of venture capital is invested in high technology companies including software, biotechnology, medical devices, media and entertainment, wireless communications, internet, and networking. In the last five years, the venture industry has also committed itself to investing in the clean technology sectors which include renewable energy, environmental and sustainability technologies and power management. However, Venture Capitalists also invest in innovative companies within more traditional industries such as consumer products, manufacturing, financial services, and healthcare services and business products and services.

How are venture capitalists different from other investors?`

Venture Capitalists are long-term investors who take very active role in their portfolio companies. When a Venture Capitalist makes an investment he/she does not expect a return on that investment for 7-10 years, on average. The initial investment is just the beginning of a long relationship between the Venture Capitalist and entrepreneur. Venture Capitalists provide great value by providing capital and management expertise. Venture Capitalists often are invaluable in building strong management teams, managing rapid growth and facilitating strategic partnerships.

How does angel investing differ from venture capital?

Venture Capital firms are professional investors who dedicate 100% of their time to investing and building innovative companies on behalf of third party investors or their limited partners. The angel investment community is a more informal network of investors who invest in companies for their own interests.

How GIIS financial are help full to access to get part with the VC for investment?

GIIS Financial team have buildup their expertise in venture- capital activities we have created good network and trust with VC firm available in India and abroad, our track record on the performance of VC’s fund management and the selection of ideal project help investor to maximize the gain on his investment and provide a good cushion for protecting any of his bad investment. We help our client to draft the contract with VC firm in his favor.

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