UNIFI Capital, aims to diversify its portfolio and raise INR 2 billion this year through its newly launched open-ended fund “UNIFI Capital India Spin-Off”.
Spin-Off fund is dedicated exclusively to investments into corporate spin-offs and demergers, according to a top company official.
“Through this fund we expect to raise an additional INR 2 billion. While the fund would be an open-ended scheme, UNIFI plans to keep an investment perspective of 18-24 months”, UNIFI Capital CMD Mr Sarath Reddy told reporters here.
He said that during 2005-2010, Spin-offs has generated higher returns of 16 per cent on an average, in comparison to the BSE 500 index during the same period of time.
He said Spin-offs were triggered by corporate restructuring as they were seeing a growing interest among listed companies in using Spin-offs to unlock value.
According to UNIFI Capital Vice-President (Product Development and Relationship Management) Mr G Maran, Spin-offs occur when a parent company distributes most of its holdings of stock in a subsidiary to the parent’s shareholders. As a result, the subsidiary company is no longer owned by the parent company.
The market valuation of a combine company would be lower as separate companies and the valuation gap is called conglomerate discount. Spin-offs help remove such discounts and improve shareholder return, he said.
Spin-off is particularly effective in increasing shareholder value because the parent company can focus on its operations.
UNIFI manages funds for several high-net worth individuals, corporate heads and to entrepreneurs. The company presently operates in Chennai, Bangalore, Hyderabad, Mauritius and in the UAE.
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