Diego Rodriguez - Final project

BPE RWR 2009 Jennifer Uhler

Business Plan

Pralhad n Associates

Prepared by

Sushil Kewlani
CEO

Presented to
 Diego Rodriguez - Final project

BPE RWR 2009 Jennifer Uhler

Individual investors, Angel investors and

Venture Capitalists

January 7, 2019
Pralhad n Associates

Alternative Investment – Executive Summary

This business plan has been developed to present Pralhad n Associate to Angel investor and

private investors, and to assist in raising the 10 million in capital needed to establish the

company and to launch its first product: a hedge fund or llp specialized in Global Macro

investing.

The Company’s Origins & Goals

Pralhad is an investment management startup company, created by three experienced, well

recognized people who are Sushil Kewlani (share trader and owner of pralhad dairy), Dhananjay

and Hitesh. This team has identified some of the oppourtunities recently happened in global

macroeconimics

- Not many creative investment opportunities are being offered: Nowadays, Indian

financial institutions almost only provide typical investment opportunities such as: bonds,

time deposits, stocks, and money market funds. However, the financial field is large and

the alternative investments have shown its benefits and potential in development markets

such as the US, the UK, and now have chance to invest in emerging markets like China

Brazil and South Africa. Alternative investment industry is in its infancy: Colombia only
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BPE RWR 2009 Jennifer Uhler

has four financial institutions which provide alternative investment opportunities.

Likewise, all of them are focused on private equity; two are specialized in infrastructure,

and the other two are specialized in growth business. Furthermore, these companies do

not have a successful experience to show because they were recently created. Therefore,

there is an explored world waiting to be conquered.

- Investment rates are in the historic low: Colombian money market funds give a fixed

return rate between 3.5% and 5%. If the inflation rate oscillates between 3% and 4%, the

real investment rate currently offered is not attractive. Therefore, the investors are

looking for more creative and profitable investments, as well as institutions where they

can trust.

Invertrust will take advantage of these opportunities by creating an investment management

firm which requires $2 million of capital to be authorized to raise public money by

Colombian financial regulators. Likewise, the company plans to launch its first product

which will be a Colombian hedge fund. This fund will invest in Colombian financial markets:

fixed income, equity, and currency. Because one of the major variables to grow an investment

management company is its performance, Invertrust is looking for $10 million to launch the

new fund and to start building a profitable track record.

The company expects to achieve $25 million in assets under management at the end of the

first year, $100 million at the end of the second year, and $300 million at the end of the third

year. The long term goal is to achieve $1 billion under management, and we project will be

achieved at the end of the fifth year.

Marketing plan
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BPE RWR 2009 Jennifer Uhler

Product/ Service. Alternative investment is defined as any other investment which is not

traditional (stocks, bonds, and cash). Among the alternative investments we can find: real

state, ETF’s, currencies, hedge funds, private equity, venture capital, and commodities. These

financial products offer special opportunities of return as well as moderate and high risk

investments. For that reason, the expertise, knowledge, ethics, and professionalism of the

investment managers are highly valuated for future investors. Therefore, Invertrust will

supply this necessity by creating an excellent investment management team. This team and

the market opportunity constitute a unique competitive advantage which will help to achieve

the success as well as a good local and international reputation.

Price. The pricing strategy will be divided in two parts. First, the management fee which will

be around 2% to 3% of the money under management. Second, we will use a success fee. We

will create a benchmark for any fund which we will create. The idea is that the funds beat

these benchmarks. When it happens, the fund will charge a success fee between 30% and

40% from the extra profits.

Place (distribution). The potential investment management business in Colombia can be

analyzed in two parts:

- Professional investment managers: These kinds of companies have the license to manage

money from the public. Among these institutions are: pension funds, insurance, trust,

security, and investment management companies. According to the Colombian Financial

Superintendence SFC, which is the financial regulator in Colombia, these kinds of

companies have $100 billion under management.

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BPE RWR 2009 Jennifer Uhler

- Banks and other financial institutions: Because time deposits and saving accounts are

considered as the first investment options for Colombians, it is important to take the

deposits in these institutions into consideration of the total investment management

business. Therefore, according to the SFC, these companies have $500 billion in deposits.

The market potential is enormous and it is avid of new investment opportunities; we strongly

believe that this is the appropriate time to develop the alternative investment market in

Colombia.

However, despite the widely market, we plan to focus on: wealthy investors, pension funds,

insurance companies, and other money management institutions. The minimum account for

invertrust will be $250,000. Thus, at the beginning we will use our own sales force,

especially because the market will be very selective. Nevertheless, after the second year,

when we think to have a tremendous growth, we plan to raise joint venture contracts with

local brokerage firms in order to expand our sales possibilities.

Promotion. We will use direct communications to attract our main investors. For instance, we

will use promotional brochures, advertisements in business magazines and we will host golf,

tennis and polo tournaments as well as develop a strong campaign in public relations to

expand the company network.

Management team

The management team will be divided in three parts:

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BPE RWR 2009 Jennifer Uhler

1. The Investment management professionals. Diego Rodriguez (CEO). Has over 15 years of

experience in the financial Colombian markets. He has developed proprietary trading

businesses in different financial institutions such as commercial banks, investment banks and

securities firms. He has a great reputation in the currency Colombian market exchange, and

currently he lead the industry leader in terms of profitable and volume operation.

Daniel Arguelles (VP of Trading Strategies). He has over 10 years of experience in currency

trading; all of these years have worked with Diego Rodriguez in developing successful

trading teams and trading strategies. He has an excellent reputation and track record in the

industry. Currently, he is the senior trader and he manages a successful trading team who are

the leaders in the industry.

Carlos Cortez (CoVP of Trading Strategies). He has over 10 years of experience in fixed

income, currencies, and equities in emerging markets, especially in South America.

Currently, he works for a US hedge fund which focuses on emerging markets.

2. Operation and control members. Ivan Ramirez (COF). He has over 20 years of

experience in the field. He is a former controller of the biggest money management firm in

Colombia.

3. Staff Members. Ricardo Urrutia. Lawyer advisor; he is a partner of one of the most well

recognized lawyer office in Colombia. Antonio Vargas. Marketing and Communication

advisor. He is the owner of one excellent recognized marketing and communication firm in

South America. Alejandro Olivares. Business advisor. He is a partner of one of the most

important real state companies in Colombia. José Maria De Valenzuela. Business advisor. He
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BPE RWR 2009 Jennifer Uhler

is a partner of an important manufacturing company in Colombia as well as a successful

Colombian entrepreneur with a long experience in private equity deals.

Financial Summary

Because the first $10 million will serve to launch the first product, the company will

have income since its creation. We have used a normal scenario instead of an optimistic

scenario in our analyses based on our experience and track record. We think that the

fund’s return will be in the 30%, 25%, 20%, 18%, and 15% for the next five years.

Therefore, because we project that the benchmark will be close to 7% and the success

fee will be 30%, we will achieve an attractive ROE of 90% for the second year and

558% for the fifth year.

Miles $ M 2010 2011 2012 2013 2014

Money under management 25,000.00 50,000.00 300,000.00 500,000.00 1,000,000.00
Management fee 500.00 1,000.00 6,000.00 10,000.00 20,000.00
Success fee ($) 1,725.00 2,700.00 11,700.00 16,500.00 24,000.00
Total Income 2,225.00 3,700.00 17,700.00 26,500.00 44,000.00

Operating expenses
Salaries Management team 480 504.00 529.20 555.66 583.44
Others 397.00 416.85 437.69 459.58 482.56
Total Expenses 877.00 920.85 966.89 1,015.24 1,066.00

Profit before tax 1,348.00 2,779.15 16,733.11 25,484.76 42,934.00

Tax (35%) 471.80 972.70 5,856.59 8,919.67 15,026.90
Net profit 876.20 1,806.45 10,876.52 16,565.10 27,907.10

ROE 44% 90% 544% 663% 558%

ROI 19% 17% 14% 13% 11%

Exit strategy
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BPE RWR 2009 Jennifer Uhler

We believe that after the fifth year the company will be ready for an IPO or we can sell it to

another big international competitor. It is common that these kinds of companies are traded in

scope of five to ten times their earnings before tax which means a $200 to $400 million of

company value in the year five.

Annotated Bibliography

Barreto, J. (2009, December 5). CFO, White Water S.A Colombia, interview.

This interview served to confirm the main characteristics which an institutional investor

looks for an investment management company.

Colombian Finance Superintendence home page. (2009). Retrieved December, 7, 2009, from

http://www.superfinanciera.gov.co

I used this webpage to find the market size and the minimum investment requirements to

launch an investment management company.

Ford, B., & Pruitt, P. (2007). Business Plan Guide. New Jersey: John Wiley & sons, Inc

I used this book in order to have an executive plan reference as well as a research of how to

create an exit strategy.

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BPE RWR 2009 Jennifer Uhler

Galan, J. (2009, December 5). Commercial Vice president, Corredores Asociados S.A,

interview.

This interview shows the point of view of an investor who wants a conservative investment

in their portfolio.

Gaviria, F. (2009, December 5). Vice president of Investment, Santander Pension Fund

Colombia, interview.

This interview served to confirm interest for alternative investment in Colombia, as well as to

explore the view from an institutional investor related to invest in a hedge fund.

McCrary, S. (2002). How to create and manage a hedge fund. Hoboken, NJ: John Wiley &

sons

I have used this book as a business bible. It explains very carefully what you need to launch a

hedge fund.

Mick, C. (2009, December 5). Private financial advisor, interview.

This interview shows the point of view from a person who manages and advices wealthy

investors.

Solnik, B., & Mcleavy, D. (2009). Derivatives and Alternative Investments. Boston, MA:

Pearson

I used this book to understand the alternative investment business.

Valenzuela, J. (2009, December 5). Investor, interview.

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BPE RWR 2009 Jennifer Uhler

This interview served to see the perspective of an individual investor.