Ronak Shah

RBI cut rates. But markets got nervous. What happened? In June, the RBI surprised everyone: 🔻 Repo rate was cut by 50 bps (more than expected) 🔻 CRR was reduced from 4% to 3%, starting in September These are typically seen as growth-friendly moves. But bond markets reacted negatively. Yields rose. Prices fell. Why? Because, along with the cut, the RBI changed its stance from “accommodative” to “neutral”. Then came a VRRR auction announcement just two weeks later, adding to the confusion. This raised questions: 🔹 Is the RBI done with rate cuts? 🔹 Is it now uncomfortable with excess liquidity? But if you look closely: ◾ Inflation is trending below RBI projections ◾ Monsoon and sowing are on track ◾ Commodity prices are down ◾ Forex reserves are above $700B ◾ RBI clarified that VRRR is for liquidity fine-tuning, not draining The central message might be: RBI wants flexibility. Not necessarily a pause. What’s interesting is how communication, timing, and perception shaped the market’s reaction more than the actual rate cut. As Ben Bernanke once said, “Monetary policy is 98% talk and 2% action.” The RBI isn’t just cutting rates. It’s also managing expectations. Follow Chakrivardhan Kuppala for more insights. (Disclaimer: This post is for educational purposes only and not financial advice. Always do your own research before investing.) #MonetaryPolicy #RBIPolicy #InterestRates #MarketSentiment #LiquidityManagement

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Mutual fund SIP assets are Rs. 13 lakh crore ( USD 150 billion) = almost 1/3rd of total MF equity assets under management (AUM) of Rs. 39 lakh crore (close to half a trillion USD) Monthly SIP flows were Rs. 26,000 cr. in March, a slight dip over previous months About 40 lakh new SIPs started in March, but 50 lakh SIPs were discontinued - market sentiment impact? SIPs are “SYSTEMATIC Investment Plans”. The fundamental concept of SIPs is to even out the impact of volatile markets - average out the ups and downs. Discontinuing SIPs when market is down defeats the purpose of the “systematic” part. Do stick to your asset allocation and investment plan.

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No surprise why HDB Financial's share price dropped over 65% from unlisted highs to the IPO price band. The hype in the unlisted space doesn’t always match fundamentals. Let’s compare HDB vs Bajaj Finance (FY25): • AUM Growth (5Y CAGR): 12.3% vs 27.2% • GNPA: 2.26% vs 0.85% • ROA: 2.16% vs 3.9% • ROE: 13.6% vs 19.2% • Price/Book (Unlisted at ₹1250): 6.3× vs 5.8× for Bajaj! • P/B (IPO price @ ₹740): 3.74× Despite lower growth, weaker asset quality, and lower return ratios, HDB traded at a premium valuation in the unlisted market—driven purely by retail euphoria. Price discovery works best when driven by fundamentals—not sentiment. What does it tell you? Would love to hear your thoughts. Follow me for data-backed insights on markets, businesses, and investing at Vaibhav Agarwal, CFA Disclaimer: No recommendations. Only for education purposes #HDBFinancial #BajajFinance #IPO #Valuation #StockMarket #Investing #NBFC #AcceltInsights #WealthWithWisdom

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#PrivateEquityBasics How General Partner (GP) make money from private equity funds? General Partner (GP) in Private Equity (PE) funds earn money through several key mechanisms associated with their roles in managing and growing the fund’s assets. Here’s a detailed breakdown of how GPs generate income: 1. Management Fees Management fees are the primary and most predictable source of income for GPs, providing a steady revenue stream regardless of the fund’s performance. These fees are typically: • Percentage of Committed Capital: Usually around 1.5% to 2% per annum of the total capital committed by the Limited Partners (LPs) • Usage: These fees cover the operational costs of managing the fund, such as salaries, administrative expenses, and overhead Example: If a PE fund raises $1 billion and charges a 2% management fee, the GP earns $20 million annually as a management fee. 2. Carried Interest (Performance Fees) Carried interest, or “carry,” is a share of the profits generated from the fund’s investments, and it constitutes the most significant and potentially lucrative part of a GP’s compensation. Key aspects include: • Profit Sharing: Typically, GPs receive 20% of the profits after returning the initial invested capital and often achieving a preferred return (hurdle rate), commonly around 8% • Alignment of Interests: This performance-based compensation aligns the GPs’ interests with those of the LPs, incentivizing the GPs to maximize the fund’s returns Example: A PE fund generates $500 million in profits after returning the original capital and the preferred return to the LPs. The GP’s 20% share of these profits would be $100 million. 3. Portfolio Company Fees GPs may charge additional fees to the portfolio companies for various services provided during the investment period. These fees can include: • Monitoring Fees: Compensation for ongoing oversight and advisory services • Transaction Fees: Fees for services related to mergers, acquisitions, or other transactions • Director Fees: Fees paid for serving on the board of portfolio companies • Consulting Fees: Fees for providing specialized expertise or consulting services Example: A PE firm might charge a portfolio company $1 million annually for monitoring services and additional fees for consulting or board services. 4. GP Commitments and Capital Gains GPs typically invest their own money into the funds they manage, known as the GP commitment. This can range from 1% to 5% of the fund’s total capital. They earn returns on this invested capital, just like the LPs, which can be significant if the fund performs well. • Capital Gains: The returns on their own capital investment in the fund, often reinvested in the same manner as the LPs’ investments, but sometimes on more favorable terms Example: If a GP commits $10 million to a fund and the fund returns 2x the invested capital, the GP’s commitment would yield $20 million, resulting in a $10 million profit for the GP

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Unlisted Market Bubble Has Popped Tata Capital IPO is coming at a -71% loss from its peak unlisted price. HDB, NSDL, Nazara — all IPOs came with a loss of approx -50%. Investors, be careful. The unlisted space is no longer the exotic goldmine it once seemed. Even top PE & VC funds are struggling to deliver returns. Why? 1) Because interest rates in the US & developed markets have jumped from 0% to 4.5%. 2) Money isn’t free anymore. Its expensive. And expensive money demands profitable ideas — not hype. Don’t chase stories. Chase sustainability. Don’t follow crowds. Follow cash flows. The game has changed. Invest wisely. #UnlistedShares #IPOBubble #TataCapital #Nazara #NSDL #HDBFinancial #VCFunding #InterestRates #SmartMoney #FinancialLiteracy #InvestingWisely

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The rise of Continuation and Secondaries Funds in India. In the recent past a lot of PE Funds have floated their continuation funds in order to ensure that they can reap in the upside of their crown jewels of the portfolio. Multiples PE had recently launched their continuation fund to take 3 assets of their FUND II portfolio in it. These 3 assets were Vastu Housing, Quantiphi and APAC Financial Services. Similarly ChrysCapital had launched a continuation vehicle to capture the upside on their NSE Holding Similarly many PE's that are nearing their fund life and still believe that there is substantial upside in the portfolio companies are launching Continuation Funds. Continuation Funds allow the existing LP's of the portfolio to exit the previous fund. It also provides an option to become an LP in the Continuation Fund. Its a highly concentrated portfolio with no blind pool risk. Though the benefits are greater, there are some risks / intentions of GP's that are to be considered here. Some PE firms may launch a continuation fund because they are not able to exit their so called "Crown Jewels" through IPO or M&A. The valuation at which the continuation fund purchases the portfolio jewels from the previous fund also is a factor to be taken into consideration. Similarly Secondaries Funds are also gaining traction in India. Secondaries funds are launched by a different entity who would buy assets from different PE Funds and then raise funds from their LP's. Here again, the blind pool risk is taken care off. Secondaries and Continuation are providing liquidity to the existing LP's of the Funds, but question on the valuation at which they are transferred is something that one should be vigilant about. #secondariesfund; #continuationfund; #privatemarkets; #Privateequity; #Venturecapital; #Generalpartners; #Limitedpartners;

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India’s Bold Crackdown on Global Market Manipulation Market Update: SEBI vs. Jane Street – A Watershed Moment in F&O Regulation 🔍 What Happened? Alleged breach of index limits SEBI is probing whether Jane Street exceeded the ₹500 crore net position cap per index in India’s F&O segment. Reports show Bank Nifty exposures around ₹50,000 crore—potentially breaching both limits and regulatory spirit. Market manipulation tactics Jane Street allegedly used “marking-the-close” strategies—bullish positions in the morning, then bearish reversals—impacting end-of-day prices. Though net-neutral on paper, the actual delta risk reportedly crossed legal boundaries. Regulatory action (July 3, 2025) SEBI’s interim order: barred Jane Street from Indian markets, froze ₹4,843.5 crore in suspected gains, and imposed debit freezes pending full review. 🔄 Regulatory Response & Industry Impact New open interest rules (from July 1) F&O positions now assessed via futures-equivalent basis: • Net EOD OI for options: ₹1,500 crore • Gross OI cap: ₹10,000 crore Aimed at curbing structural loopholes and restoring clarity. Expanded probe SEBI is reviewing 3 years of Jane Street’s activity across India and Singapore to detect patterns of misuse. Global significance India’s message is clear: global firms, regardless of scale, must comply with fair market conduct. 🌐 Market-Wide Implications HFT & proprietary trading in spotlight Opaque algorithmic logic won’t shield firms from scrutiny. Future compliance will require transparency and intent validation. Retail trust reinforced With retail now driving 60–65% of index option volume, this action protects their trust and safeguards systemic integrity. Higher compliance benchmarks incoming Expect: • Real-time OI surveillance • Algorithm audits • Tighter inter-exchange reporting ✅ What’s Next? • Jane Street has 21 days to respond and seek a hearing. • SEBI may impose permanent sanctions and seek full disgorgement. • Peer firms (Citadel, IMC, Optiver) are tightening their internal controls. 🧩 My Perspective This isn’t just enforcement—it’s a structural reset. For capital market professionals, it reaffirms the need for: • Clean, auditable algorithmic strategies • Strong compliance systems • Client education on risk and fairness As India advances as a global financial hub, accountability will define credibility. — Mazhar Pasha #SEBI #JaneStreet #CapitalMarkets #FuturesAndOptions #MarketIntegrity #HFT #RegulatoryStrategy #FinancialLeadership

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Total potential ESOP wealth in India stands at INR 14.2 lakh crore! That’s 22% of India’s mutual fund industry AUM — and more than twice the PMS industry’s AUM. Let that sink in. But the biggest ESOP wealth creators are not who we usually think. Nifty 100 companies generate more ESOP wealth than the entire startup ecosystem. HDFC Bank alone created INR 5,282 crore of ESOP liquidity in 2024 — twice as much as India’s entire startup ecosystem did that year. It’s clear that ESOPs are massive wealth-creation engines hiding in plain sight. Yet our quiz last week revealed some surprising facts: Over 65% of ESOP holders with more than ₹1 crore in ESOPs are unaware of vesting calculations, the impact of dilution, or whether their employer’s ESOP policy is favourable. When Revant, Shantanu, and Chirag invited me on the Asymmetric Podcast, I stumbled upon research that made me question many of my own beliefs about this underrated wealth-creation tool. We break down India’s ESOP story in under 75 minutes, covering: - Salary vs Salary + ESOP - Ranking different ESOP policies - Cases where ESOP wealth was lost - The Flipkart Mafia - Life-changing ESOP stories of non-founders - How founders should allocate ESOPs - And a big surprise at the end I promise this will be worth your time — even if you have just 1 unit of equity in your company. Link to the full episode in comments! #ESOPs #WealthManagement #Dezerv #AsymmetricPodcast

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