Nine Rivers Aurum Small Cap Opportunities
Nine Rivers PMS | Equity | | PMSIME's View on Nine Rivers Aurum Small Cap Opportunities
Strategy
Private Equity Approach to Small-Cap Investing
Investment Fund
We like the firm's focus on small-cap investing, with the additional advantage of the investment rigour of a private equity approach. The strategy has also demonstrated the ability to deliver longer-term outperformance.
Fund's Strategy View
Backed by the Private Equity credentials of the founding team, Nine Rivers Aurum Small Cap Opportunities follows a private equity style approach to listed small-cap investing (private equity thought process, buy-and-hold investment approach, more detailed & rigorous investment research process). It aims to invest in a concentrated portfolio (12-15 high conviction ideas) of small-cap stocks (market cap of less than 5000 cr). Stocks are invested with a 3-5 year investment horizon, with clearly defined risk-control limits at the time of portfolio construction (10% max stock weight, 25% max sector weight). Nine Rivers do not follow a model-portfolio approach, instead choosing to invest in what are the best investment ideas at the time of investment.
Fund Performance
Fund returns are largely in-line with category average returns over the past 5 years. In terms of longer-term annual performance, performance has been consistent, with the fund having outperformed it's benchmark in over 60% of annual calendar years.
IME's View on Nine Rivers PMS
View on AMC
Nine Rivers Capital PMS is a reputable PMS provider specializing in small-cap investing with a private equity approach. They have a strong investments team and a focused approach to mid-and-small cap investing, making them a recommended choice for those interested in smaller companies.
AMC's Pedigree
Founded in 2012, Nine River's Capital is a niche PMS investing with a PE style in listed equities. The fund has a strong track record of outperformance and specializes in small-cap investments.
AMC Team
Nine Rivers Capital has a strong investment team led by founder Sandeep, who has over 20 years of PE investing experience. The firm has recently faced some churn issues, with one of their long-term senior members of their investments team (Vivek Ganguly) having left Nine Rivers in 2024. While this is a negative, the founder Sandeep Daga is ultimately the driving force of investment decisions (along with a seasoned research analyst team) and we believe that this churn should not have an impact on the investment philosophy or longer-term fund performance.
Investment Philosophy
Nine Rivers Capital focuses on investing in small & mid-cap companies using a private equity approach (extensive research, long-term buy & hold approach). They conduct thorough research, including scuttlebutt research, during a 4-8 week process to select stocks. Their stock selection methodologies and risk-control frameworks are well-defined.
Investment Philosophy
Nine River Capital PMS’s Aurum Small Cap Opportunities fund aims to invest in a concentrated portfolio (12-15 high conviction ideas) of small-cap stocks (mkt cap of less than 3500 cr). The portfolio also has a unique product structure with a fixed term of 5 years, and the endeavour is to monetize the portfolio by the end of the tenure in a systematic fashion. Nine Rivers Capital PMS’s core belief is that you can only generate superior long-term returns in small & mid caps by applying the same rigor and discipline as in private equity investing. The aim is to exploit the judgmental biases and behavioural weaknesses of market participants, to identify attractive investment opportunities. Nine Rivers looks for the following attributes in possible investee companies – dominance in a niche vertical, growth tailwinds, a robust balance sheet, strong ROEs and a lack of institutional research coverage.INVESTMENT PROCESS
- Ideation and Discovery: Spotting value-creation drivers through macro-tailwinds (policy, regulatory, consumer-behaviour, and technology among others)
- Fundamental Evaluation: Strong 15% earnings growth with free cash flows, low leverage, good governance and sustainable 15%+ ROCEs
- Conservative Entry Point: Buy growth at reasonable valuation. Average entry PE below 20x.
- Risk Management: Constant monitoring (of positions, performance, governance and macro), pro-active exits (based on valuation guardrails, thesis deviation, macro events, and superior alternatives), and selective forensic diligence where indicated.
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Nine Rivers Aurum Small Cap Opportunities | -9 | 19.1 | 27.8 | 26 |
| S&P BSE 500 | -6.6 | 14.7 | 19.2 | 14.3 |
| Alpha over Broad Mkt BM | -2.4 | 4.4 | 8.6 | 11.7 |
| Nifty Smallcap 250 | -9.3 | 21.5 | 27.2 | |
| Alpha over Category BM | 0.3 | -2.4 | 0.6 |
Performance as of: 30-Sep-25 | Inception Date: 20-Dec-12 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Sandeep Daga | 5-star rated FM
Founder & CIO | 27 yrs Experience | 13 yrs at current firm
Past Experience: Director (Frontline Strategy), Head - B2B Investments (ICICI Venture)
Sandeep Daga has over 20 years of experience in Private Equity, Public Markets, and Corporate Finance. Having worked at one of India's leading Private Equity Funds (ICICI Ventures), Sandeep brings his private equity experience to investing in the listed space - by adopting a private equity style approach to listed small-cap investing. He is known for his focus on small and mid-caps.
