Nine Rivers Aurum Small Cap Opportunities
Our view on the fund, the AMC, the strategy, the performance & the investment team.
IME's Review of Nine Rivers Aurum Small Cap Opportunities
| Fund Rating | Strategy Rating | Performance Rating |
|---|---|---|
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View on the 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.
Strategy
Private Equity Approach to Small-Cap Investing
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
The fund has underperformed peers & is amongst the worst performing schemes in this category in the last 5 year trailing returns. In terms of longer-term annual performance, performance consistency has been mixed, with the fund having outperformed & underperformed the bechmark roughly in half the years.
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Nine Rivers Aurum Small Cap Opportunities | -7.8 | 11.3 | 12.5 | 24 |
| S&P BSE 500 | -1.1 | 12.2 | 11 | 13.6 |
| Alpha over Broad Mkt BM | -6.7 | -0.9 | 1.5 | 10.4 |
| Nifty Smallcap 250 | 0.9 | 19.7 | 16.2 | |
| Alpha over Category BM | -8.7 | -8.4 | -3.7 |
Performance as of: 31-May-26 | 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.
IME's Review of Nine Rivers PMS
| AMC Rating | Pedigree Rating | Team Rating | Philosophy Rating |
|---|---|---|---|
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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, structured around their **ASCEND** framework — investing **Ahead of consensus** in under-appreciated opportunities, sizing the **Size of the opportunity** by TAM depth and quality, backing **Competitive advantages** still being built rather than fully priced in, assessing **management on Execution** and character, filtering for **Numbers that compound** (revenue growth ≥15%, earnings growth ≥20%, ROCE ≥20%, strong cash conversion, low debt), and holding **Discipline on price and process** through valuation guardrails and active monitoring.
AMC Background
Nine Rivers Capital PMS was founded in 2014 by Sandeep Daga (an experienced private equity professional), with an aim of bringing ‘private-equity’ style investing to listed small & mid cap investing in India. AMC Backed by Investment Team with Strong PE Credential Founded in 2014, Nine River's Capital is a niche PMS that aims to invest with a PE style in listed equities. While it is backed by a strong promoter with strong PE credentials, the firm has not yet scaled in-line with its potential.Investment Philosophy
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. Private-equity Approach to Small-cap Investing Nine Rivers Capital has a clearly articulated investment philosophy focused on investing in small & mid-cap companies with a private equity approach. The stock selection methodologies, along with their risk-control frameworks are strongly defined.ASCEND Framework
Their stock-selection process now follows the ASCEND Framework, a private equity approach applied to public markets, built on six tenets:- Ahead of Consensus: Hunting for the discovery premium in out-of-favour sectors nearing an earnings inflection, long-duration structural themes the market only prices in episodes, and fundamentally good businesses in temporary distress.
- Size of Opportunity: Assessed in two layers: absolute TAM (is the runway long enough?) and quality of TAM (structurally attractive market vs. a commodity bloodbath in disguise), tested by whether the market could absorb the company tripling its revenue without triggering a price war.
- Competitive Advantage in the Making: Investing one step earlier, when the moat is visibly under construction but not yet fully built, tracking signals like emerging pricing power, accelerating market share gains, rising customer stickiness, widening cost advantages, network effects, and brand deepening.
- Execution & Management Quality: Assessed on Capability (capital allocation, capital distribution, working capital management, incentive alignment) and Character (a documented history of word matching deed, ecosystem scuttlebutt, and direct interactions with the second and third line) — this tenet is non-negotiable.
- Numbers That Compound: Qualitative conviction must withstand quantitative filters: revenue growth ≥15%, earnings growth ≥20%, ROCE ≥20% (or a credible path to it), cash conversion of 50–70%+, and low-to-no debt. Direction matters more than speed.
- Discipline of Price and Process: Valuation discipline (intrinsic value as a range, not a point estimate; buying below the lower band; accepting opportunity cost over capital cost) combined with process discipline: a private-equity mindset, written guardrails on entry and exit, active monitoring against all six tenets, and repeatability of process.
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.
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