Counting on his advice

Why Nilesh Shah, MD of Kotak Mahindra Asset Management, feels it’s time to pay back

Few years back, when Nilesh Shah was sipping his usual orange juice in a plush five-star hotel in Mumbai, a stranger hobbled towards him. The old man, dapper in a black tuxedo, put his right hand over the head of Nilesh and told in an endearing tone, “‘ Beta’, thank you. It’s thanks to your investment advice that I am able to dine in a five-star hotel.” Nilesh Shah, the managing director of Kotak Mahindra Asset Management clarifies that, that was not praise, but a blessing.

Nilesh Shah is a celebrity in the financial world. “I have seen you on CNBC” is a typical comment he hears while visiting malls or other public places. Some days back, when he went to visit a dentist, the doctor’s secretary did not want him to pay for the service. “Doctor is happy with the good performance of your funds” , he was told.

Nilesh Shah is an old hand in the mutual fund (MF) industry, with stints at Franklin Templeton MF, ICICI Prudential MF and now Kotak Mahindra.

“Over the last two decades, my advice has remained unchanged — be a regular investor, focus on the longer haul and stick to your asset allocation strategy”, he says. However, this is what most MF CEOs say; what is it that differentiates him from the rest.

Success story

Before we delve into it, let’s look at his success story. “I was doing my CA articleship near Dalal street in Mumbai in the early 90s. Those days, everyone was greatly fascinated by the stock market, thanks to Harshad Mehta”, he said. As a gold medallist of his batch, the world was his canvas. He soon got an offer from the construction and engineering major, Larsen & Toubro. However, the landscape was changing for financial experts with the ushering in of financial liberalisation by the Narasimha Rao government in the early 90s.

“A gentleman at L&T took me to a corner and said: “You are young; why don’t you try a hand at financial services, which has a bright future”. Nilesh took the plunge and made a debut in the investment banking division of ICICI Securities (I-Sec).

The start was rickety. It was 1992-93 and the IPO bubble had just been pricked. Most of the IPOs that I-Sec had managed were quoting below issue price. I realised that it was not sustainable, recollects Nilesh.

ICICI debut

Post-Harshad Mehta scam, “all the good guys were either in jail or retired,” says Nilesh half-in-jest. A completely new set of regulatory changes were being ushered in and his fascination for bond markets grew. He got an opportunity from I-Sec to get trained in Singapore, with the formation of the new joint venture with JP Morgan. Being trained at one of the world’s top financial markets gave him an initial leg up in bond markets back home. “This was the time when if you knew how to calculate YTM (yield-to-maturity), you could become best friends with bank treasurers”. The market was nascent and he used the technical knowledge gained from JP Morgan to introduce concepts such as floating rate issuances and structured products in the Indian market way back in 1995-96.

MF calling

In 1997, a call came from the Human Resources department of Franklin Templeton Mutual to be part of the global bond market team. He took the job. As luck would have it, Asian crisis soon roiled Asian markets.

He started managing local bond funds, post-crisis, and with the sharp fall in the interest rates, his bond funds made a huge killing. “Debt fund returns were double that of equities then”, he said.

In 2004, he joined ICICI Prudential MF as its Chief Investment Officer as well as Deputy Managing Director. The assets of the fund house grew from ₹15,000 crore to ₹70,000 crore before he called it quits in 2010.

When he quit, Shikha Sharma (veteran at ICICI Bank) gave him an opportunity to head the investment banking division of Axis bank. After four years, he left Axis in 2015 and ever since has been marshalling the operations of Kotak Mahindra MF.

Nilesh’s special trait is his ability to be honest. “Sometimes, I find him getting philosophical in round table sessions”, complains another CEO on condition of anonymity. Also, ask him why he is a perennial bull.

He admits that it’s partially got to do with the job. “Also, there are so many bottom-up stories up there”, he says, hinting at many opportunities to give market-beating returns in the equity market.

Few years back, when Nilesh was party to a heated debate in a round table conference, an old lady from the audience stood up and said “many years back, you had given me nice investment advice, Nilesh. I am following that. My retirement is secured”.

“That’s when you feel blessed”, says Nilesh. However, despite receiving so much accolades from thousands of investors, Nilesh wants more. The story goes to his childhood days.

Give back

As a small boy, he stayed in a chawl in Mumbai. “I lost my father at an early age and the financial condition was bad. The finances were sufficient to sponsor studies of only one of the siblings — his sister or himself”. I took up studies and my sister didn’t.

“That somehow kept me driven at all times”, he says. “Moreover, when charity came from unknown sources, I felt blessed and grateful.”

“I feel by making people earn money, in some way, I am getting an opportunity to give back” he says. How many jobs help you accumulate blessings, he asks the author. The Bollywood phrase “ Inhe dawa ki nahi, dua ki zarurat hai” (He needs not medicine, but blessings), best describes what Nilesh wants now and forever.

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