Mumbai-based Pantomath Capital Advisors, in a joint venture with Pi Square Investments –Pantomath Pi Square Asset Management LLP — launched a new fund offer (NFO) India Inflection Opportunity Fund (IIFO) to raise Rs 400 crore from domestic and global institutional investors, family offices and high net-worth individuals.
The new JV will manage funds for emerging businesses at inflection point. “We believe that many businesses are at inflection point but lack appropriate means of finance at crucial stage of business life cycle. The Fund shall handhold them as their growth partner and aim to benefit fund investors alongside,” says Mahavir Lunawat, Froup MD, Pantomath Group.
While Pantomath will integrate with the emerging small and mid market companies, Pi Square will provide investment-related advice. Pantomath has an experience of managing approximately 100 IPOs in the last 5 years with maximum number of institutional deal in SME platform and Pi Square is experienced in managing multiple family offices through proprietary valuation process and models.
This fund will source, invest and nurture emerging businesses that are at the inflection point of growth trajectory, thereby targeting sectors like consumer goods, Make in India, rural consumption, pharma & healthcare, financial services & chemical industries. It will avoid traditional venture & PE growth investments such as e-commerce, fintech with negative cashflows and bleeding balance sheets.
“At PPS we are focused on under penetrated businesses with established foundation and visible growth trajectory in future years. We would like to focus on huge addressable market opportunity avoiding traditional Venture and e-commerce platforms with negative cashflows and bleeding balance sheets. Our India Inflection Opportunity Fund will provide the growth capital to various enterprises through active ownership approach,” remarks Mr.Vishrut Pathak CIO and Fund Manager, Pantomath Pi Square Asset Management LLP.
The fund will invest 70 per cent in equity and equity-related instruments (30 per cent listed and 40 per cent unlisted) and the rest in debt. Under listed equities, the fund will invest in listed securities, IPO and PIPE. Under unlisted, the fund will invest in Pre-IPO, convertible preferred stock, structured bonds, exchangeable bonds, compulsory convertible debentures, warrants, convertible note and optionally convertible debentures. The portfolio will hold approximately 25 companies for a period of 5 years.
Debt instruments will be held for a duration of 18-24 months. Listed equities will be held for 24 to 36 months and unlisted stocks will be held for 48 to 60 months. This Hybrid investment strategy will work on proven business models. It is a category II Alternate Investment Fund (AIF). Vishrut Pathak will be the portfolio manager. He has an Investment Management experience of 17 years. After working for 12 years with various financial firms in New York, he co-founded ‘Pi Square Investments’ in Jan 2011.
PPS claims that the concentration of risk will be low with its unique hybrid allocation strategy that provides 4-4.5 per cent interim periodic payouts on debt instruments. However, opportunity funds are generally concentrated bets based on corporate restructuring, government policy changes, regulatory changes and therefore have high risk/return strategy.