Silverdale Bond Fund has delivered over 10 per cent a year when you can hardly get 2 per cent from a Singapore bank. How? Sanjay Guglani (CIO) and Aseem Arora (President) explain
12/11/2017 5:32:49 PM
|written By : NIthya Subramanian|
Facts first. Numbers don’t lie. When average interest rates on bank deposits in Singapore are less than a meagre 2 per cent, a return of more than 8 per cent a year in US dollars is no mean achievement. Singapore-based Silverdale Capital has consistently delivered returns of 8-10 per cent making it one of the brightest stars in the fund management business in the region. Its clients are not just high net worth individuals but also top ranking financial institutions, who see great value in investing with Silverdale.
Over the last one year, Silverdale has doubled its assets under management to almost a billion dollars and is confident of doubling the number next year.
This success story piqued our interest and prompted India Se Media to interview Silverdale Capital founder and CIO, Singapore-based fund manager Sanjay Guglani. Silverdale’s scintillating performance is matched by the top-class office premises, located on the 35th floor of Suntec Towers. Offering mesmerising 270-degree expansive views taking in a huge swathe of Singapore on one side and Indonesian islands on the other, the office is awash in natural light, a rarity in many modern office spaces. In fact, Guglani, who received us, said that the entire office is lit without turning on a single light. Openness to ideas and clarity seem to be reflected not just in the work but even in the work space.
Guglani’s success story is something that will inspire anyone. An entrepreneur since his youth, he started his first venture – a computer training institute – while still at school in India. He went on to be a chartered accountant and a management accountant and further distinguished himself as a Sloan Fellow from the prestigious London Business School, which he attended as a Chevening Scholar.
A pioneer in his field, he managed one of the first retail portfolio management schemes in India and handled India’s largest badla (cash-futures arbitrage) books in the 1990s. He is also credited with bringing in the first foreign investment into India for last mile broadband. Valued for his acumen and expertise, he served on the National Advisory Committee for small and medium enterprises. He also represented India at the United Nations Conference on Trade and Development (UNCTAD) session on e-finance at Switzerland.
But it was in Singapore that Silverdale Funds was born. Guglani had lived in London in early 2000s. But what made him move to Singapore? It was an inspired choice.
“We had offices in London, Switzerland, Singapore, Hong Kong, Indonesia, Philippines, Dubai,” he said. “We were the largest lead-manager for convertible bond issuances from India. We had several joint ventures with Morgan Stanley, Goldman Sachs, Lehman Brothers. With Lehman, we were setting up a coal jetty in South Kalimantan in Indonesia. In September 2008, Lehman Brothers went belly up. I rushed to salvage those assets. As we had an office in Singapore, I stationed myself in Singapore and flew to Jakarta two to three times a week.” But things were not easy as meetings with Indonesian clients went on for hours and he did not understand Bahasa Indonesia. “I spoke for 10 minutes and they would discuss among themselves for a couple of hours. It was extremely frustrating, to say the least,” he said.
That’s when his mother’s words helped him change course.
“My mother was pained to see me in turmoil. Being a practical lady, she asked me to focus on some ‘barkat-wala kaam’ (business which grows steadily). On my usual 9:55 pm Jetstar flight to Singapore, I was as usual deeply disillusioned. I was quietly mulling over her words, ‘barkat-wala-kaam’. What investment does everybody make? Which grows year-after-year? Where if one big counterparty (aka Lehman) gets bankrupt, it does not jeopardise the golden nest? Where there could be a perpetual annuity income? Some ‘Fill it – shut it – forget it’ type of business. And the bulb lit!”
“Everybody in civilised world is a fixed income investor: when you keep money in a bank you are ‘investing in fixed income’, whether it is in savings account or term deposit, it does not matter. As global wealth is increasing, the investment in fixed income securities is increasing, and will always increase. Instead of putting money in a ‘single’ bank where we keep deposits, if we invest in bonds issued by several banks and other blue chip issuers, then even if one counterparty (aka bank) gets bankrupt, the investor would be safe. We also know bonds will pay interest, irrespective of stock market movements; hence, the money will grow year-after-year. Now, the only problem left is: the returns offered by safe investment grade bonds of around 2-3 per cent is very low. This was bothering me. And I had my Eureka moment: if returns are low, so is the cost of borrowing. If we could borrow at low interest rates and invest at higher interest rate, we would have a killer product. And Silverdale Bond Fund was conceived. I was super-calm and dozed off. In the next two years, we exited all businesses and started focusing exclusively on fund management.”
As he narrated the story, one could sense a hint of emotion that was quickly replaced by passion as Guglani spoke about his work and company.