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Modular Construction Housing Needs - Red Ribbon Asset Management Plc

Modular Construction: The Answer to Housing Needs

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Modular construction is the answer to housing needs

Modular construction is an option for building homes that’s been available for over a century. Its popularity has ebbed and flowed with various significant events and global developments. However, one thing that remains clear about the system of preparing a property in a factory and then constructing that same building on site, in a matter of a few days or even just hours, is that it’s one that builders and policy makers return to whenever a new crisis or real need for homes arises.

Modular homes quickly gained in popularity in the US when they were developed and then sold by Sears at the end of the 19th century. That was fuelled by increasing wealth and an abundance of land to live and build on. The Great depression which began in 1929 soon put paid to the growth of buy and build your own home. And by 1932, Sears’ modular construction home sales were down by 40%. That was enough for them to put an end to that particular part of the business.

World War II ends

However, it wasn’t so very long from then, until the end of World War II in 1945 when soldiers and Governments could fully take in the sheer size of decimation across the UK and Europe, following years of fighting, destruction and bombing.
Add to that the returning soldiers needing homes to live in with their families and it was clear new homes needed to be built. Quickly. Pre-fabrication proved popular once again, with several areas in the UK benefitting from this fast and economical construction method.
However, once things began to settle, the workforce was back in balance and skilled builders were willing and able to work and modular construction, fell out of favour once more.

Confluence of developments

Fast forward to 2019 and there are a broad array of developments that have combined to once again push modular construction to the forefront of residential home building, but this time on a global scale:

  • The UK’s housing crisis where a lack of building during the credit crisis means there aren’t enough homes for the still growing population – the Government is supporting modular construction options to quickly build suitable housing for Britons across the country.
  • Geo-political unrest and refugees moving from place-to-place with nowhere to live – the RICS recently awarded a young home designer its top prize for his low-cost bamboo home that takes just 4 hours to build, to help with the slum crisis in the Philippines.
  • Economic prosperity and demand for homes and commercial properties in rural and city regions – India’s economy is among the fastest growing in the world and the changing needs of the country for less rural workers, to more city-based jobs, means more urban homes are required, quickly.
  • More and more people have developed an eco-conscience, either through their own nature or the growing number of ecological changes and concerns the global population is faced with – home-buyers and developers around the word are actively seeking green homes that are built with sustainable materials and are also powered that way, too.

Together, these separate crises and changes have led to greater demand for modular homes from a wide variety of consumers and policy makers. Meanwhile, that demand combined with a larger business desire to consider sustainability and green options, has encouraged further investment in the sector, too.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, setting out to meet the challenges posed by India’s urban housing shortages in a practical and dynamic manner. The company is at the heart of a project established by Red Ribbon to harness the potential of India’s markets and delivering opportunities for investors. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Red Ribbon CEO, Suchit Punnose said:

When we think about how modular construction has time and time again proved the right answer to a crisis, problem or change, it becomes a much simpler decision as to whether or not it’s the right investment choice. Add to that the fast-growing knowledge about the importance of eco options and sustainability and modular construction becomes an even more compelling proposition.

Modular construction is already part of India – and the world’s – property development needs. And that’s something that is only going to increase as it becomes a major element of the construction landscape. Not only due to its speed of delivering the finished, habitable product, but also its cost-effectiveness, green credentials and sustainable factors it brings.  That’s why Red Ribbon was committed to Modulex Construction from the very beginning of the project and we remain committed to it today. I’m convinced it is not only a vital element in meeting market challenges but will also deliver on the unprecedented opportunities currently presented by the subcontinent’s burgeoning economy.

Modulex is the answer to many of India’s immediate needs and beyond. By creating sustainable, cost-effective homes and buildings across the country, Modulex is part of a growing industry that will remain relevant and profitable for many, years to come.

India Economic Ambition Planning - Red Ribbon Asset Management Plc

Broad-based planning supportive of India’s economic ambition

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Broad-based planning supportive of India’s economic ambition

It may be a New Year, but in many countries, old worries remain.

Take the UK, for example. Brexit is as uncertain as ever and that’s unlikely to change any time soon. Not only have forecasts for economic growth in the country been tempered by the lack of a clear path for Brexit, the latest survey data from IHS Markit have served to underscore the worry felt by consumers and businesses, with the country’s dominant services sector close to stagnation during December

However, the UK isn’t the only country experiencing uncertainty as to how 2019 will unfold.

India has an interesting 12 months ahead as incumbent Prime Minister Narendra Modi must work hard to maintain his position, after recent state election results make the likelihood of a new leader a real possibility. However, Modi has begun 2019 with ideas and a plan to show his support of the large farming industry, which is unhappy with the lack of fiscal support from the Government.

Speaking at the India Science Congress this week, the India PM urged scientists to find low-cost solutions for ‘social good’, including the creation of a more affordable and balanced agriculture industry and using big data analytics to improve crop yields for farmers with smaller holdings.

Introducing this element to the PM’s broader outlook for India’s economic development may always have been the plan. Although, there will likely be many who will say its merely a move to encourage more votes in an election year.

Regardless of the truth, this latest step is a further sign that Modi’s economic ambitions for the country remain front-and-centre.

Economic outlook

Even before this latest speech, the outlook for growth in the country was upbeat, particularly when compared with global competitors.

Despite some GDP forecast downgrades from the likes of Fitch Ratings and the OECD – to a still healthy 7.2% and 7.3% respectively – India is assessed to have outpaced China during 2018 and to do so again in 2019. India’s finance ministry, meanwhile, forecasts economic expansion of 7.8% during 2019, which would likely be similar to the average pace of growth across 2018, despite the slowdown to 7.1% in the third quarter.

Indeed, it appears that the third quarter GDP number is partly behind most of the forecast reductions, although other details also weigh. They include:

  • Generally weaker global GDP outlook.
  • Global trade worries.
  • Liquidity squeeze.

Modi and his Government, however, are upbeat and standing firm on their positive outlook. Many would say, with good reason.

Despite the difficult global scenario, some developments have been in India’s favour. The high price of crude oil has receded, despite the sanctions against Iran. Meanwhile, the country has moved up the World Bank’s ‘ease of doing business’ rankings. And while there has been some disagreement over the Government’s demands for the Reserve Bank of India to relax some restrictions on weaker banks, inflation has remained under control.

The decision to remain firm on many fiscal elements of governance while creating a more supportive backdrop for businesses and consumers, has been a core driver of the strong level of economic expansion across India. It appears that focus on moving forward with policies designed to encourage start-ups and innovation is very much still in place.

Modi told delegates at the Science Congress that following on from its success of improving its ‘ease of doing business’ score, it must now work to improve the ‘ease of living’ in India. That requires a broad-based plan; working to support businesses across every industry, supporting innovation and new ideas, job creation across every industry and providing a stronger and more reliable infrastructure for consumers.

At Red Ribbon we understand the importance of introducing innovative developments into an existing industry, which is why we believe the Eco Hotel industry is one that can help ensure India’s economic growth ambitions will succeed and even exceed expectations.

Red Ribbon CEO, Suchit Punnose said:

An economy the size of India’s will only flourish if a broad-based outlook is in place that also supports innovation and allows every industry to move in an agile fashion, particularly when it becomes clear that a new approach is required.

India’s leisure and tourism industry is a case in point. It draws tourists from within and without the country to its variety of regions and attractions. Introducing a new type of accommodation, such as Eco Hotels, will work to add yet another string to India’s bow as the destination of choice for an even broader range of holiday-makers and business travellers, while supporting jobs growth and industry innovation at the same time.

As long as business start-ups and industry innovations are supported and encouraged, they will only have a positive impact on India’s economy, the standard of living and the global environment.

India - The case of Investment - Red Ribbon Asset Management Plc

India: The case for Investment

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United Kingdom is the gateway to many investment opportunities, of which India is one to take notice of. India’s economy and business landscape are changing, ushering in a period of growth, prosperity and investment opportunities.

Let’s look a little more closely at just a few of the more compelling reasons why investing in India is an opportunity you can’t afford to miss:

The Indian economy is the fastest growing major economy in the world. It surpassed China in 2015 and is forecast to expand by 7.7% in 2018, before accelerating to 8.3% in 2019. India’s population is also expected to increase from 1.34 billion and exceed that of China, within the next five years.

As 10 million countryside inhabitants move into India cities, per annum, urban society across the country is increasing. Those new and growing societies are increasingly wealthy, sophisticated and technologically literate, providing a platform for growth, fuelled by demand.

India also has an incredibly supportive government that’s working hard to facilitate economic growth and a fundamental change in the way the population lives and interacts. PM Narendra Modi has introduced a single tax base across India’s 29 states, while the regulatory environment has also radically transformed.

United Kingdom – gateway to India

United Kingdom is an economy that has a proven track record at identifying areas and regions that have a lot to offer. That’s why India is already among the countries where investments and partnerships can be easily accessed via United Kingdom.

As a UK-based business, Red Ribbon Asset Management Plc is an obvious partner to access those Indian investment opportunities.

Not only do we understand what is driving India’s economy and investment boom, at Red Ribbon we know how different areas of investment are performing. Our well-connected Indian-based team, provides hands-on support to our UK-based investment specialists. It’s a successful partnership, that ensures we identify the right investment for each and every investor we work with.

Red Ribbon has been involved in numerous major projects in India and the UK, that have proven successful in both execution and from an investment perspective.

But, that’s not all. At Red Ribbon we believe investments should offer benefits to everyone involved. Aligned with our philosophy and core values, all our investments are morally acceptable, provide measurable social and environment impacts and deliver strong financial returns.

As you can see, Red Ribbon Asset Management Plc has been quick to recognise the potential in India and through us you can access an array of investment opportunities.

Red Ribbon brings you a gateway into investing in India, offering bespoke services in wealth management, private equity and real estate. Our strong network of contacts means we know India from the inside and outside. That’s just one reason why we’re ideally placed to identify the best opportunities as they arise.

Red Ribbon CEO, Suchit Punnose said:

India is more than just an exciting investment opportunity, it’s also a driver to global economic growth and that’s why Red Ribbon has long held the view that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are deployed in Growth Markets and, of course, for us that has always meant India in particular.

And of course this vindicates Red Ribbon’s decision in 2008 to place India and its fast growing markets at the heart of our investment strategies from the very start. Our expert advisers now have an insight into what makes the subcontinent’s markets tick, what makes them so profitable and where the best opportunities for above market rate returns are likely to be found.

The Best Exits: Innovations in India’s Private Equity Market

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How do you spot a Private Equity Investor at the Opera? He’s the one scouring the lobby for the best exit.

You’ve probably heard that one before. Its an old joke but still speaks to a fundamental truth about all private equity strategies: whilst looking resolutely to the long term (often more than ten years ahead), as soon as the initial investment is made Private Equity Investors will also be searching for the best exit strategy, and in today’s markets that usually means an IPO or a Merger. So next time you’re welling up with emotion at Turendot, keep an eye out for anyone scribbling one or other of those magic words in their programme: they’ll probably be managing a Private Equity Fund.

And given India is now the best performing Private Equity market in the world, it should come as no surprise to learn that the subcontinent is also at the cutting edge of the latest and most innovative of these long term exit strategies.

Take, for example, the Platform Acquisition model: not in itself a novelty, but now being given a fresh lease of life in India. In its new guise the strategy focuses on selected market quadrants and brings them together to create synergies for a targeted return as opposed to more traditional growth through capital infusions into the platform company itself. Think Indian IT and the subcontinent’s burgeoning consumer market, then think Flipkart and you’ll get the idea. Its an intelligent version of the old fashioned roll up strategy where multiple small companies in the same or complementary sectors are acquired or merged prior to being rolled up for exit, and in its new format it has made Private Equity a real force for consolidation and growth within the Indian economy.

Warburg, Pincus and KKR have all launched Platform Acquisition models for projects on the subcontinent, with chosen sectors including business services, media, hotels and hospitality all of which are, of course, already high growth areas. Mid market hospitality in particular is going through something of a renaissance at the moment with this year’s IPO of Lemon Tree Hotels being oversubscribed by a factor of 1.19 and Eco Hotels continuing to make strong inroads into the environmentally friendly segment. Everstone has a Food Services Platform following its acquisition of Modern Foods through which it has subsequently gobbled up Cookie Man; and Goldman Sachs, never slow to spot a trend, has a new Business Services Platform on the subcontinent, appropriately named First Meridian and focusing on HR and staffing companies for later roll up. Sutra HR had better be watching their backs…

Head of M&A at EY India, Ajay Aroa sums it all up nicely: “ The platform acquisitions and their roll ups have made private equity investors the main consolidation force in a number of India’s high growth sectors, standing to benefit equally from growth as well as multiple arbitrage”.

That last point is also interesting (and incontrovertibly right): smaller aggregated acquisitions, characteristic of those completed through a Platform Acquisition model, are very often delivered at a comparatively low exit multiple, giving the platform owner an enhanced arbitrage opportunity. Bearing in mind Blackstone’s private equity investments in India have delivered annualised returns of 30% since 2011, PE Platform Investors will usually lift the aggregate multiple by leverage or arbitrage (or both) in order to compete… and at the moment they’re competing very well indeed.

Red Ribbon Asset Management has placed India at the heart of its investment strategies since the company was founded more than a decade ago, and nobody understands the subcontinent’s potential for growth better than Red Ribbon. Benefiting from an unrivalled knowledge of local conditions and more than a hundred local advisers reporting from some of India’s fastest growing markets, the Red Ribbon Private Equity Fund offers a unique opportunity to share in that potential.

Red Ribbon CEO, Suchit Punnose said:

As any Private Equity investor will tell you, nothing is more important than having a clear and deliverable exit strategy, set out in detail at the earliest opportunity. Especially so as most funds will look to lock their investors in for an extended period, often for as long as ten years so that investors need to have a clear understanding from the outset of just how they will exit the fund to secure an optimal return on their investment. That used to be an issue in India where traditional family run companies were resistant to exit by private sale, but the subcontinent’s modern markets have now made the task a lot easier through the increased efficiency of IPO and M&A mechanisms: now, as the article points out, the two most favoured modes of exit for Indian companies.

I’m not surprised, either, to hear of the innovations currently taking place in the subcontinent’s private equity sector. After all India is the fastest growing Private Equity market in the world and it would be surprising if it should prove resistant to the innovative policies being rolled out elsewhere in the economy. You only need to look at the participants involved (KKR, Goldman Sachs and Blackstone) to get a feel for the underlying strength of the sector.

And of course I’m proud too that the Red Ribbon Private Equity Fund is part of this process. We will always be looking for the most exciting opportunities India’s markets have to offer, using the most innovative strategies available so as to deliver the best above market rate returns for our investors.

India Private Equity Exits - Red Ribbon Asset Management

Exits and Entrances: A good year for Indian Private Equity

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According to this month’s influential Bain Report, Private Equity Exits grew on the subcontinent by more than 60% in 2017 (India Private Equity Report 2018): an unprecedented $15.7 Billion, up from $9.6 Billion in 2016 and making last year the best ever year for PE exits in India. The number of exits also rose in absolute terms: 211 in all, which marks 7% growth year on year. More importantly perhaps, given this is now the third successive year of growth in exit volumes and value (stretching back to 2015), those familiar with India’s Private Equity Segment will be relieved to move on to brighter uplands, in a sector which has historically been bedevilled by low exit rates.

So what is fuelling the trend?

Well, a lot of it is undoubtedly down to the increasing resilience of India’s Capital Markets and its improved regulatory structures, mostly introduced by Prime Minister Modi’s Government since 2015. Those are both critically important because private equity investment means taking a long term stake in a business and often working with existing management on re-gearing programmes leading to realising asset value. And in India that has often meant investing in small to medium sized family run companies, mostly conservative by instinct and almost all averse to disposing of the business. So without a disposal, just how are you supposed to get your money out? That dilemma lay behind the old (and happily now outdated) adage that in India it was “easy to invest but hard to exit”.

Not anymore though…

In excess of 50% of the subcontinent’s exits in 2017 were structured through Public Markets, including Initial Public Offerings (IPOs) where much improved Market systems and Regulatory frameworks have made it much easier to exit a PE venture by selling all or part of the stake without having to sell the business (even the most conservative family business will be happy with the outcome).

And it’s not hard to find practical examples of how this is all working out on the ground: take for example Tiger Global’s secondary share sale of Flipkart for $800 million last year (making use of the new market regulations) and Apax Partners’ partial exiting of IT giant, GlobalLogic for $780 million: where for the past three years Apax were returning in excess of 20% compound annual growth on its 96% holding in the company, and the 50% stake which was disposed of reportedly sold for 300% of the original investment.

A further factor pointing to the resilience and likely long term growth in exit values is the some $9 Billion of dry powder currently held by PE Funds investing in the Indian sector (according to the same Bain Report), signalling a broad parity with equivalent dry powder levels in 2016 and strongly suggesting that the overall potential and attraction of investments on the subcontinent is likely to remain unabated for the foreseeable future.

Red Ribbon’s Private Equity Fund offers a significant opportunity to participate in India’s resurgent markets, combined with the ability to realise the initial investment after the initial lock in period but well before the ten-year period conventionally imposed by other private equity funds. The Red Ribbon Fund also benefits from the company’s unique and long standing specialist knowledge of India’s markets, with more than 100 advisers and consultants working daily on the ground in the subcontinent’s hotspots helping to identify the best available investment opportunities.

Red Ribbon CEO, Suchit Punnose said:

Private Equity Investment is virtually unique in the long-term vision that it requires for the business platform. Not only a full understanding of the nuts and bolts of the business, but also a viable plan for optimising asset value and a clear, if still long term exit strategy.

As the article notes, I am sure the radically improved market and regulatory conditions brought in over the last three years by Prime Minister Modi’s Government lie behind the resurgence in exit volumes and values on the Indian Market and I am confident too that with three years consistent growth on this key variable, the subcontinent is set to offer unprecedented opportunities for PE Investment.

Real Estate India - Red Ribbon Asset Management

“The Time for Change is Now”: India Real Estate Beyond the Bubble

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Western Economists react sceptically to any suggestion of a model for sustainable economic growth, reverting typically to Keynes’ maxim that most “markets can stay irrational for longer than you can stay solvent”. And certainly since the financial meltdowns of 2008, markets across the globe have grown increasingly accustomed to short-term investment strategies, often with the single default of Government Bonds as a buffer against turbulent trading cycles. “Most markets” that is… except for India. Because the subcontinent has been bucking this trend for at least the last five years, and in the process it has created a new paradigm for sustainable and resilient economic growth.

Take, for example, India’s Real Estate Markets.

According to this year’s CREDAI Report (the highly influential barometer for trends in real estate globally) property investment on the subcontinent is set to increase from an already strong base to at least USD 180 Billion by 2020, with new funding for domestic housing making up 47% of that total and expected to double by the same year. These projections and underlying rates of growth are wholly atypical of worldwide property markets, but the sheer consistency in performance of Indian markets over recent years suggests investors would be well advised to look now to the subcontinent for the type of longer term solutions that are increasingly unavailable in more developed economies.

And you don’t have to look far to find the reasons for why CREDAI’s growth projections point to sustainable growth as well.

India’s vastly improved regulatory climate, for example, has helped sustain progressively increased demand for domestic and commercial properties, matching the needs of the subcontinent’s growing and increasingly urbanised population with a parallel relaxation on the historic fetters which have tended to act as a brake on development. Added to that there is now a much more fertile fiscal environment as well, primarily  as a result of measures introduced by Prime Minister Modi’s Government such as the much heralded RERA initiative which is expected to consolidate current trends by eliminating some of India’s more unscrupulous development activities as well as, of course, the new Goods and Sales Tax (“GST”) which is expected to result in a reduction in global development costs of up to 4%.

Recent relaxations in FDI restrictions have also provided an enormous boost for foreign investment, most notably a sharp increase in Private Equity participation in the real estate sector. The CREDAI Report notes that “Private equity investments in real estate increased by 12% year-on-year across 79 transactions in 2017.”

And the Report itself concludes with something of an understatement: “The time for change is now…Game changing developments like RERA and GST have created a strong base for the sector to grow and coupled with India’s strong economic advancement they have provided a perfect spring board for investment in Indian Property.”

The Red Ribbon Real Estate Fund offers a unique opportunity to participate in the enormous potential of India’s Property Markets, with the benefit of unrivalled expertise from the company’s team of experts operating in all key segments and informed by a network of more than a hundred analysts and advisers working every day in India’s pivotal areas of expansion. The Fund was launched last year so as to make the most of the opportunities offered by these explosive trends for growth in India’s property sector. The aftershocks of the Bubble experienced by western property markets in 2008 is now a distant afterthought for the subcontinent.

Red Ribbon CEO, Suchit Punnose said:

As the Article points out, Red Ribbon’s Real Estate Fund was listed last year to make the most of explosive growth trends in Indian Real Estate markets, and with the benefit of our expert teams working both in the subcontinent and at our head office in Mayfair, we are in an unrivalled position to calibrate just where and why the best opportunities for above market rate returns are likely to be found. Red Ribbon has placed India at the heart of its investment activities for more than a decade now, and we are proud of the accumulated knowledge this has given us: particularly in key areas such as the commercial and domestic real estate segments.

This store of accumulated knowledge confirms too the sustainable character of the current trends for growth in both segments as confirmed by the CEDRAI report, so I can only concur with the Report’s conclusion that the time to invest is now. And especially so with the radically improved regulatory and legal measures now in force in India, creating a commercial climate that has never been more conducive for successful investment, aided of course too by the key fiscal initiative introduced by Prime Minister Modi’s Government.

India Republic Day - They will change our World - Red Ribbon Asset Management

India Republic Day: “They will change our World in ways we cannot yet imagine”

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History, as Alan Bennett nearly said, is just one thing after another…

How true, and if only the seeds of India’s historic move to independence, celebrated annually on 26th January –Republic Day– were spread a little wider across the world: we could all learn from the essentially peaceful and non-violent movement that made independence a reality on the subcontinent after three hundred years of British rule and several strokes of Dr. Ambedkar’s pen (in Hindi and English of course) on 26th January 1950.

And of course Dr. Ambedkar would undoubtedly have been proud of what India has become today, the young people of India in particular.

Some 600 million Indians, more than half of the subcontinent’s burgeoning population, are currently less than twenty-five years old. No country on earth has such a high proportion of young people and, as the Delhi writer Snigdha Poonam put it in her recent book “Dreamers”:

No matter how poorly placed they may find themselves now, they make up the world’s largest ever cohort of like-minded young people, and they see absolutely no reason why the world shouldn’t run by their rules…they will change our world in ways we cannot yet imagine”.

No doubt she was thinking about Suhas Gopinath, a Bangalore based businessman born (for those of us of a certain age, sickeningly recently) in 1986 and he is also the youngest CEO in the world having taken the hot seat at the IT Leviathan, Global Inc, at the tender age of seventeen, three years after founding the company. Gopinath taught himself to engineer websites from the books in his bedroom and put together his first website from an Internet café in Bangalore when he was just fourteen. He now serves on the boards of various leading companies on the subcontinent including the ICT Advisory Board of the World Bank, the Indian Government’s Ministry of Science and Technology Group and the Social Peace Foundation. Talk about changing the world…

And then there is the increasingly ubiquitous Ritesh Agarwal known to his friends, for reasons that will become obvious in a moment, as the wunderkind. Young Ritesh started coding software when he was eight years old. Now a grand old man at 24, he is perhaps the youngest multi-millionaire to come out of India’s booming startup community so far. Founder and CEO of a network of budget hotels, he is also seeking to build on the subcontinent’s pressing need for additional hotel accommodation which is, of course, an area that Red Ribbon Asset Management is also making pioneering moves in through its innovative EcoHotels venture. But there again the market is clearly big enough in this, the fastest growing large economy on the planet to support two innovative entrepreneurs in the same sector…

These then are the increasingly public faces of the powerhouse that lies behind the Indian Economic Miracle: young, innovative and changing the world. Dr. Ambedkar would undoubtedly have been proud of all three of them.

Red Ribbon CEO, Suchit Punnose said:

Too often we stand and marvel at India’s economic miracle without stopping to think what lies behind it: what is it that makes it the fastest growing large economy in the world, with GDP growth currently outstripping the United States by a factor of three to one (four to one in the United Kingdom’s case)?

This article touches on just one of the key reasons but it is an important one that bears reflecting on further as we celebrate Republic Day this year; namely, the sheer unrestrained ambition of India’s under twenty-five-year-old population who are, as Snigdha Poonam famously put it in her recent book, changing the world in ways we cannot yet imagine. This is a vast natural resource that India can be rightly proud of.

The article touches on only two of these young people, but I know there are hundreds more working across all four corners of the subcontinent and in the future, we can expect thousands more to join them, in what is little short of an entrepreneurial revolution. And Red Ribbon is very proud to be part of this powerhouse generation, taking its place at its vanguard through an ongoing involvement in innovative and groundbreaking ventures such as the EcoHotels project.

So, all in all, I’m very confident that things can only get even more exciting in the years ahead… Watch this space.


Sustainability On The Subcontinent: Making It Happen

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In 2014 the World Bank reported that environmental factors including air and water pollution, deforestation and natural disasters were costing India more than $80 Billion a year (just over 6% of its GDP). In addition to the human tragedy involved, that is something we would do well to remember particularly bearing in mind the severe flooding in the Northern Indian States at the moment. If nothing else it demonstrates the inescapable connectivity between the wider economy, local communities and the environment: a dynamic which sits at the very heart of Red Ribbon’s Mainstream Impact Investment Strategies for its Indian Market Portfolio.

But, of course, ongoing issues of poverty and rural poverty, in particular, have inevitably attracted more attention from Prime Minister Modi’s Government outside the prism of specific natural disasters such as those presently being experienced. In 2012, for example, just 36% of India’s population had access to rudimentary sanitation facilities.

For this reason, much of the discussion on sustainability in India has tended to focus on improving social inclusiveness; bringing the population at large and the rural population in particular up to a common standard. That ideology is certainly at the heart of recent Government initiatives on Green Energy Generation where a key focus was the need to bring sustainable, reliable electricity supplies to India’s rural poor for the first time.

In 2014 the Indian Government also launched the Swachh Bharat (or Clean India) Campaign as part of a five-year effort to improve sanitation on the Ganges and other heavily polluted rivers with the aim of making India clean by 2019 and both Domestic and Multinational Companies have proved important partners in delivering sufficient traction for the Project.

There’s a particular fiscal reason for that as well.

In 2013 India became the first country in the world to introduce a mandatory Corporate Social Responsibility programmes (CSR) which requires some 8,000 companies doing business in India to invest at least 2% of their annual profits in CSR initiatives; and as a result of that programme more than $2 Billion a year is now being invested in poverty reduction programmes as well as social and environmental initiatives The legislation also requires companies to make the relevant investment, wherever possible, in their local communities.

All of which is, of course, admirable and the resulting investment is certainly working its slow way into the roots of the Indian Economy, but is this really what we mean when we talk about investing in sustainable projects? All too often, fiscal incentives of this kind can give rise to a tick box mentality at an executive level, treating sustainability as just another (necessary) cost of corporate compliance. But it can be so much more than that. Profound and resilient long-term change is much more likely to be achieved by decoupling economic growth from it’s “adverse social and environmental consequences”; favouring investment in businesses that do not regard sustainability as a compliance exercise, but as a means of securing a competitive advantage, a resilient business and long-term financial sustainability”

That’s what Mainstream Impact Investment is all about.

Mainstream Impact Investment Strategies recognize the importance of the delicate balance between communities, the wider society and the environment at large; driving effective sustainability by tapping into mainstream market economics and delivering long-term, resilient change in the process; not just by way of one-off projects that are fiscally attractive in the short term. That is why Red Ribbon Asset Management has placed Mainstream Impact Investment Strategies at the centre of its Portfolio Management Policies. Delivering above market rate returns as well as sustainable, positive change in the process.

Read about the World Bank Report here: www.worldbank.org/en/country/india
Read about the Indian Corporate Responsibility Programme here: https://www.pwc.in/assets/…/handbook-on-corporate-social-responsibility-in-india.pdf

The Changing Paradigm of Mainstream Impact Investment

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Red Ribbon Fund Management has long been committed to Impact Investment Strategies. For more than a decade it has been at the cutting edge of strategies that not only look to deliver above market rate returns for its investors, but also to achieve the best, most positive impacts on our communities, our wider society and on the environment generally. It is important that these strategies are also sustainable, offering long-term solutions within the mainstream economy; because the Fund Managers at Red Ribbon understand short term, one off interventions however positive their transient impact might be, can only ever be of limited significance to the wider community.

Just think for a moment of the difference between a one off famine relief effort in Darfur and a commercially viable project that will build up the same region’s agricultural infrastructure. There is a world of difference, precisely because commercial viability is the single biggest driver of long-term economically sustainable projects.

That’s what Red Ribbon means by Mainstream Impact Investment: investing in worthwhile projects that are commercially self-sustaining: because they deliver commercial returns for investors as well as a positive impact for our wider communities. It’s not just about doing the right thing, it’s about commercial common sense as well.

And after ten years, it’s a message and a mission that is attracting increasing levels of support amongst the wider investment community as well.

Take Morgan Stanley which last month raised in excess of $125 Million in final commitments for its first Global Impact Investment Fund (the Integro Fund). Launched in conjunction with the Morgan Stanley Institute for Sustainable Investing, Integro is now planning to invest exclusively in Private Equity Funds offering above rate market rate returns but which at the same time demonstrate a potential for positive environmental or social impact (or both).

It rings a bell doesn’t it?

In their Press Release issued at the time of the launch, Morgan Stanley explained that they were expecting the Integro Fund to maximise commercial returns for investors, but also to increase access to quality jobs, education and healthcare along with other socially beneficial outcomes; as well as striving to impact the environment in a positive manner and reduce the effects of climate change.The Investment Managers at Morgan Stanley’s Integro Fund also plan to provide detailed, impact-related reporting alongside traditional financial statements for its investors; and that too has long been a central component of Red Ribbon’s investment strategies. Red Ribbon Fund Management favours companies just like these: companies that are able dispassionately to calibrate the negative and positive impacts of their economic activity as well as being transparent with key internal and external stakeholders on just what those impacts are. Red Ribbon believes that more responsible corporate conduct is likely to be driven by such transparent policies and the better levels of social engagement that it engenders.According to The Global Impact Investing Network, 90% of investors in Funds pursuing an Impact Investment Strategy have reported that returns on their investments either met or exceeded expectation, which may help explain why Impact Investment Strategies are gaining so much traction at the moment. In 2013 an estimated $46 Billion was allocated to impact investing; that figure had grown to $77.4 Billion by 2015 and The Monitor Institute predicts it will reach $500 Billion by 2020.

Commercial returns combined with long-term economic growth; and social growth that is capable of making a real difference to our world. It’s the Red Ribbon way and it’s what makes Mainstream Impact Investment so important.

Read about The Global Impact Investment Network

Read about The Monitor Institute

Read about Red Ribbon’s Fund Management Strategies 

Read about Morgan Stanley’s Integro Fund 

Growth Markets and the importance of infrastructure

By | India | No Comments

Jim O’Neill (of Goldman Sachs Asset Management) believed “Growth Market economies will be the driver of the world economy in the coming decade”, and he should know because he coined the term back in 2011; and O’Neill recently predicted that by 2020 the four BRIC economies between them would be responsible for no less than 50% of the increase in Global GDP. It’s an economic vision that is endorsed unhesitatingly by the team at Red Ribbon Asset Management, which is dedicated to delivering above market rate returns for its investors through deploying funds into Growth Markets on a Mainstream Impact Investment model, and it has its sights set on the Indian Market in particular.


If it is right that Growth Markets are a key driver for the future, then infrastructure spending is the key to how fast that growth will happen, and nowhere is that more apparent than in India.


The highly respected Ratings Agency Crisil, reported this month that the infrastructure order book for the top fifty companies constructing highways in EPC mode in India, would reach a staggering Rs 1 lakh crore by the end of this year; with top line revenue growth projected for 15 per cent over the coming year. The Report also suggests that some of these companies are already delivering 20% (compounded) growth annually.


As we have had cause to note previously on this site, the sheer scale of public infrastructure spending in India at the moment can be mind boggling; and the Crisil Report now demonstrates that the programme as a whole is not, by any means, being driven only by the appetite of Prime Minister Modi’s Government. The extraordinary rates of return currently being secured by the companies involved is as mind boggling as the programme itself, and no sensible commentator would expect other companies not to be attracted in turn. It all bodes well for the long-term viability of these ambitious policies and for the future of the Indian economy as a whole.


There is, though, also another important lesson to be drawn from the Crisil Report’s findings.


Conventional impact investments have historically often been made in marginalised and deprived areas of the world, often characterised (unkindly) as the “base of the pyramid“: pursuing unquestionably welcome objectives by targeting poverty, seeking to improve health conditions and the well-being of a deprived community; but investments of that kind are unlikely to yield a financial return. They are disconnected from the underlying economy proper and so are unlikely to give rise to long term, resilient change (once the project is over it is over). That is why Red Ribbon Fund Management believes in Mainstream Impact Investment strategies: connecting positive impacts on society and the environment with the underlying economy, because a business operating on those principles will be more resilient for the long term as well.


It fits well with what is happening in India at the moment.



Read Jim O’Neill’s overview of Growth Markets here: www.goldmansachs.com/our-thinking/archive/intro-growth-markets/

Read about Red Ribbon’s Impact Investment Strategies here: https://redribbon.co/

Read the Crisil Report on Infrastructure Profiling here: https://www.crisil.com/research/super-16-sectors.html

Read about Red Ribbon Fund Management here: https://redribbon.co/



Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.


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