Based in Singapore, NAV Capital Global Opportunities Fund is making significant strides in the Indian market through its NAV Capital Emerging Star Fund.
Managed by Vineet Arora, the fund, with an AUM of approximately 700 crore, primarily invests in India, with a target to reach 2,000 crore by the end of CY24.
The fund employs a sector-agnostic approach, focusing on companies demonstrating robust growth and possessing a ‘Moat.’ This diversification includes both SMEs and Mainboard companies, aligning with the fund’s investment philosophy and criteria.
Investment Rationale and Portfolio Expansion
Vineet Arora highlights the recent addition of companies like Dronacharya Aerial Innovations, Annapurna Swadisht, and EMS, among others, with the total holdings reaching 20.
The fund aims to triple its portfolio by the end of the current calendar year, expanding from an amount of about 700 crore to 2,000 crore. Investments in entities like Felix, Fonebox Retail, Addictive Learning, Australian Premium, and Platinum Industries showcase the fund’s focus on unique ‘Moats.’
For instance, Addictive Learning’s Law Seekho platform caters to a significant user base, filling a void in the US legal sector.
Key Investment Factors
Vineet Arora emphasizes a straightforward investment strategy centred on well-managed companies offering unique products and services.
Evaluating aspects such as business models, financial health, and the competence of management, the fund’s approach mirrors that of private equity investors in public markets.
By fostering an open ecosystem for investee companies, NAV Capital encourages synergies and best practices without the constraints often associated with private equity investments.
Risk Assessment Strategies
Assessing risk factors, Vineet Arora underscores the importance of comprehensive research, balancing qualitative and quantitative assessments.
Managing asymmetric information risk involves in-depth sector-specific research, leveraging the expertise of the origination team and business experts.
Any company whose management is overly focused on valuation is flagged as a potential risk, reflecting NAV Capital’s commitment to thorough risk management.
Despite being a global fund, NAV Capital predominantly invests in the SME space in India. Vineet Arora dismisses concerns of overheating or liquidity shortages, emphasizing the critical role of the MSME sector in India’s journey towards a $5 trillion economy.
With a vast number of listable MSMEs and a clear need for significant capital injection, the fund sees ample room for growth in this sector, indicating that the story has only just begun.
