Nine Rivers Capital

Funds managed

Fund nameAsset ClassLicense
Aurum Small Cap OpportunitiesSmall CapPMS

About the AMC

  • Nine Rivers Capital Holdings Private Limited is a Private incorporated on 01 November 2007.
  • On the back of strong equity legacy, Nine Rivers Capital distinguishes itself as an asset management firm that exclusively focuses on small cap public equities.
  • Believe in generating superior risk adjusted long term returns from small/mid-cap companies require application of the same rigor and discipline as in private equity investing, something that is amply demonstrated in our exemplary track record.
  • We have emerged as preferred institutional platform for Indian HNIs & Family Offices for their small cap allocations and are poised to rapidly grow by expanding our geographical reach to overseas investors as well.
  • Sandeep Daga, the fund manager of the firm has 24 years of experience and is MBA by the qualification.

Investment Philosophy (for firm)

Our investment philosophy revolves around exploiting the judgmental biases and other behavioral weaknesses of market participants at large to unravel attractive investment opportunities from time to time. This includes the tendency of the larger market participants to extrapolate the past too far into the future

Investment Strategy

https://pmsbazaar.com/AMC/Nine-Rivers-Capital

It is a low churn portfolio where 12-15 small cap stocks are picked and invested for a time frame of 3-5 years.

Nine Rivers adhere to a 360-degree approach to investments. They endeavour to buy solid businesses that exhibit multi-year structural growth run by good management teams and are available at a significant discount to their intrinsic value.  

They generally look for the following attributes in prospective investee companies:

  1. Being a dominant player in a niche vertical
  2. Aided by policy tailwinds / changing consumer dynamics / technology etc
  3. Robust balance sheets 
  4. Business generates / has the potential to generate high ROE / ROCE
  5. Non / under coverage by ‘sell side’ analysts.

Their proprietary ‘Price Guardrail Strategy’ – is the key to credible risk mitigation

They have developed a proprietary framework to assign an ‘entry price guardrail’ and an ‘exit price guardrail’ to each stock that is approved for investment. They strongly believe that the most effective risk mitigant in small and mid-cap investing is to ‘not overpay’ to buy a stock. They buy a stock as long as it is available within the entry price guardrail and sell a stock the moment it breaches the exit price guardrail. 

Funds managed

Portfolio nameAsset classLicense
AURUM SMALL CAP OPPORTUNITIES
Equities – small capPMS
AURUM GROWTH OPPORTUNITIESEquities – ?PMS

Fees & charges

Management FeesAs per commission model
Upfront Fees0.85% – 1.45% of Asset Value
Brokerage Charges0.006% – 0.016% of Total Transaction Value
Custodian Charges0.15% – 0.25% of Asset Value
Depository Charges0.08% – 0.15% of Asset Value
Exit Load – within 12 months0.75% – 1.15% of Withdrawal Value
Exit Load – post 12 monthsFree

Commissions

Prepaid CommissionYes
Volume% CommissionYes
Profit Sharing% CommissionYes
PlanPrepaid Commission (Yearly)Volume% Commission (Yearly)
25L-50L1.2% of Investment0.12% of Total Transaction Volume
50L-1CR1.1% of Investment0.11% of Total Transaction Volume
1CR-5CR0.9% of Investment0.09% of Total Transaction Volume
>5CR0.7% of Investment0.07% of Total Transaction Volume
Profit Sharing% Commission (Yearly)
Profit Amount  2.5L – 5L22.5% of Profit
Profit Amount  5L – 10L21.5% of Profit
Profit Amount 10L – 50L18.5% of Profit
Profit Amount  >50L16.5% of Profit

CHARGES

Management FeesAs per commission model
Upfront Fees0.85% – 1.45% of Asset Value
Brokerage Charges0.006% – 0.016% of Total Transaction Value
Custodian Charges0.15% – 0.25% of Asset Value
Depository Charges0.08% – 0.15% of Asset Value
Exit Load – within 12 months0.75% – 1.15% of Withdrawal Value
Exit Load – post 12 monthsFree

Media

Title: Nine Rivers Capital Invests Rs 50 Cr in Pranav Construction, Source: VCcircle, Date: 19 February 2009

https://www.vccircle.com/nine-rivers-capital-invests-rs-50-cr-pranav-construction/

Private equity firm Nine Rivers Capital in its debut investment has picked up a minority stake in Navi Mumbai-based Pranav Construction Systems for Rs 50 crore. Pranav Construction is a formworks engineering solutions provider. Formworks, which find application in the infrastructure space, are temporary structures which are designed to hold and support wet concrete until it cures. Nine Rivers is currently investing from a $125 million private equity fund focused on India-centric opportunities.

Analyst questions

  • What is your investment philosophy?
  • What is your USP to attract investors?
  • You have been in the industry for a long time now, what have you learnt from your journey so far, that you would be doing differently now?

Prepared by – Taniya Nagpal

Peer review and additional questions

  1. Considering the onset of the second wave of Covid-19, would you consider investing more towards defensive sectors like IT and FMCG?
  1. How much time do you take to rejig your portfolio if a particular company/companies are underperforming?
  1. In the last 8 years, you have invested in a total of 72 companies as a part of your small cap PMS. Why such a high portfolio turnover ratio?

By Kapil Sethia

Author

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