Kotak India Focus- Series 2

The main objective of the Investment approach is to generate capital appreciation through investments in equities with a medium to long-
term perspective.

The portfolio shall essentially target to invest in Value Opportunities and Special Situations in individual stocks and related instruments. Value Opportunities are ones, where in the opinion of the fund manager, the company’s Intrinsic Value is ‘X’, while the stock is trading at a discount to X. Special Situations are dependant on the probability of occurrence of one or more corporate events, rather than market events. These situations can largely be classified as follows:

• Price arbitrage: In such situations securities are bought at a discount to the price, which is/ maybe guaranteed by any institution. These situations can arise in the form of buybacks, de-listings, etc.

• Merger arbitrage: In such arbitrage, shares of a company can be created at a discount to the current market price.

• Corporate restructuring: Such arbitrage is a consequence of specific corporate action in the form of spin offs, asset sales, management change, etc. leading to either value unlocking or cash payouts to investors