B2C businesses with durable competitive advantage and sustainable growth at reasonable price

Key Attributes

Inception Date: 05 Oct 2015

Number of Stocks: 12 - 18

Fund Manager Name: Hemant Patel & Rakhi Prasad

Fund Manager Experience:

Hemant is the Managing Partner and Founder of Alder Capital. He has over 20 years of experience in capital markets, with 15 years in institutional equity research, advising some of the largest global and domestic institutional investors.

Rakhi Prasad, Investment Manager at Alder Capital has over 19 years of experience across asset management, investment banking, private equity, and risk management.

Fund Manager Qualification:

Hemant has obtained his MBA from Australian Graduate School of Management, University of NSW in 2000.

Rakhi received her BA Economics, Lady Shri Ram College; BS Computer Science, University of Michigan, Ann Arbor and MS Financial Engineering, Columbia University, New York

Investment Objective

Seek B2C businesses with durable competitive advantage and sustainable growth at reasonable price. Invest in business owners/managers with outstanding culture and high governance standards.

Investment Strategy

Investment Approach – We are a fundamentally driven long-term orientated fund, seeking high-quality businesses with distinctive competitive advantages that enable them to generate high economic returns and sustainably grow over a long period. We prefer businesses that use less leverage, generate free cash flows, have outstanding management culture and available at a reasonable risk-to-reward value. Our inclination is to build a concentrated and inactive portfolio, taking risk in a manner that is less than commensurate to long term returns.

We believe consumption centric B2C businesses are within our circle of competence. Over the years, our team (collective 40 years) has researched and dealt with listed and private businesses in 3 specific baskets – consumer staples, consumer discretionary and branded B2C businesses. Our knowledge base of understanding consumption related businesses, industry dynamics, competitive rivalry and managements enables us to reduce portfolio diversification and increase prospects of consistent returns. Plus the benefit of specialization is it eliminates surprises and results in performance in line with our investment decisions.

Consumption centric businesses are generally more secular growth character. Such businesses have consistently made positive returns in the medium to long term across business cycles. Thus such businesses then to have less volatility, better growth visibility and add more stability to the portfolio in terms of return profile.

Our passive investment strategy i.e. low churn means that investors will incur less incidence of short term capital gains taxes. Thus yielding better post tax returns.

Focus in a particular sub segment of the market (~39% of India’s market cap) which has time and again created wealth for investors due the structural and sound fundamental nature of businesses that operate within the consumption related space. Thus risk adjusted return should be better than a broad based strategy.

Investment Philosophy

The rise of Indian consumer is a multi-decade event which will have positive spill over effect on consumer products and services. Thus we focus on consumption centric B2C businesses which are scalable, possess durable competitive advantage, generate free cash flows and demonstrate outstanding management culture.

Punchline

B2C businesses with a durable competitive advantage and sustainable growth at a reasonable price. Invest in business owners/managers with outstanding culture and high governance standards.

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