Edelweiss Discovery Fund – Series 1 Cat II AIF

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We are one of India’s newest and fastest growing asset management firms, and a proud part of the Edelweiss Group. We believe in listening to you, understanding your issues, and then providing answers. We believe in accomplishing something that will last a lifetime. Company has its own value which includes We are about customers. You first, simple.We take care of our biggest asset – our people. We love our team.We go above and beyond to solve your problems and build solutions for you.We’re open and transparent in our communication. We say it like it is, no mumbo jumbo.We manage your hard-earned money with care and honesty.Technology should make your life easier. And we make that happen.

Fund Snapshot

Fund Name Edelweiss Discovery Fund – Series I
Category Of Fund Category II Closed Ended Alternative Investment Fund
Sponsor Commitment 2.5% of the Fund size or INR 5 crores, whichever is lower
Term 5 years from final close
Commitment Period 30 months from initial close
Final Close Within 24 months from the initial close
Minimum Investment
  • Class A1 : Rs. 1 crore and < Rs. 5 crore commitment
  • Class A2 : = > Rs. 5 crore commitment and < Rs. 10 crore commitment
  • Class A3 : = > 10 crore commitment
  • Class A : = > Rs. 50 Lakhs : Accredited Investors

 

Entry Load Up to 2% of commitment amount
Management Fees Class A1 : 2.00% p.a. ; Class A2 : 1.75% p.a. ; Class A3: 1.50% p.a. ; Class A: 2.00% p.a.
Performance Fees 20% over a hurdle rate of 10% (charged at the end of the tenure without catchup)
Co-Investment Allowed for eligible investors
Investment Manager Edelweiss Asset Management Limited
Taxation Capital Gain + Other Income (Pass through to the Investors)

Sector-Agnostic Approach – Positive Bias Towards New Economy Businesses

Consumer Brands

  • Large opportunity: Retail market expected to grow to $1.7 Tn by 2025.
  • Category creation: Entrepreneurs are targeting the unorganized segment and offering more convenient alternatives. E.g.: Licious for fresh meat.
  • Technology Enablers:
    • E-Commerce – quick access to vast distribution.
    • Social Media – cost-effective marketing for focused target group.

Specialized E-commerce

  • Large Opportunity: ECommerce GMV touched $40 Bn USD in 2020 and growing at 20% CAGR.
  • Benefits of Specialization:
    • Specialized players tend to dominate niche categories and have lower customer acquisition costs and higher retention.
    • Focus on procurement and logistics leads to higher Gross Margins and superior service quality.

B2B Disruptors

  • Large Opportunity: Several B2B services, businesses are disrupting traditional inefficient solutions in logistics, supply chain and other functions
  • Market share gain from unorganized: These companies are rapidly taking share from unorganized segment. E.g. Logistics $174 Bn industry, only 3% organized.
  • Technology differentiation Using technology to drive superior service levels to end users.

Investment Pipeline

Company A

  • Company A is a supplier of pallets to companies for their supply chain operations
  • Company A has pioneered a leasing model that enables FMCG companies to use pallets and crates on a pay per use basis.
  • Technology dashboard for FMCG customers to track their supply chain operations in real time.
  • LFY Rev : 177 Cr, Growth Rate : 20%

Company B

  • Company B buys used electronics through the exchange programs of e-commerce platforms. The products are then refurbished and sold on e-commerce platforms.
  • India’s smartphone market is 173 mn units in FY21 and smartphone user base is ~500 mn & growing at double digits. These drives demand on both the demand and supply side for the company.
  • LFY Rev : 345 Cr, Growth Rate : 41%

Company C

  • Company C began with the premise of offering group fitness as a more sustainable alternative to solo training. It has grown to become the largest collection of fitness D2C brands.
  • Extended offerings to online fitness sessions, ecommerce for fitness gear, health food, mental health solutions and telehealth.
  • LFY Rev : 250 Cr, Growth Rate : 257%

Company D

  • Company D is a high speed long distance trucking aggregator, specializing in efficient solutions for time-sensitive cargo of ECommerce, Courier, Pharma and Retail businesses.
  • They use technology to significantly improve customer supply chain metrics – asset utilization is 2x industry, Customer TATs better by 20%
  • LFY Revenue 91 Cr, Growth Rate 49%.

Company E

  • Company E operates a marketplace for hospital to procure medical devices and consumables.
  • Traditional distribution channel, particularly for consumables is fragmented – unreliable and high channel margin.
  • The company provides a single window sourcing platform along with an efficient logistics solution to ensure timely delivery of critical products.
  • LFY Rev : 559 Cr, Growth Rate : 220%

Company F

  • Company F is disrupting the agency channel for insurance distribution.
  • 120,000 offline advisors tied up with the platform to sell insurance policies online.
  • Also a technology company, selling its risk assessment platform to insurers as a SaaS product
  • LFY Rev : 164 Cr, Growth Rate : 30%

About The Fund Manager

Nilesh Saha

Nilesh has deep expertise with consumer and financial services businesses in India. During the last 8 years at Edelweiss AMC he has led minority investments in several emerging businesses from these industries. Examples of these include CGCEL, Dr Lal Pathlabs, NSE among others. As the Fund Manager of Edelweiss Alternative Equity Scheme, he has a track record of delivering 19% CAGR (net of fees) at a 0.60 beta to the Nifty. Nilesh started his career with Goldman Sachs where he helped the firm structure bespoke derivate instruments. He has graduated from BITS Pilani in Mechanical Engineering with high Honours and is a CFA Charter holder. Nilesh is a member of CFA Society’s Advocacy Committee and through this body he regularly engages with financial regulator on avenues to deepen financial markets in India.

Investment Process

The fund aims to select fundamentally strong companies on a high growth trajectory

Origination

  • Edelweiss Network
  • Strong ties with VCs and Investment Banks
  • Top-down themes proprietary deal ideas.

Transaction Execution

  • Due diligence to cover commercial, accounting and legal matters
  • Deep focus on strong corporate governance 

Active Portfolio Monitoring

  • Work closely with founders on overall business strategy
  • Help with key senior hires 
  • Bolt-on acquisitions
  • Strengthen governance

Exit

  • Proactive approach to engage with prospective buyers / bankers
  • Exit negotiation and deal execution

Potential Risks and Mitigants

  • Low dependence on IPO markets.
  • Focus on backing high quality companies. Will also have exit opportunities via secondary transactions or sale to strategic buyer.
  • Rigorous fundamental-based approach. Will not chase popular names at unrealistic valuations.
  • Mid-Stage PE provides margin of safety: Potential for valuation multiples to expand as the companies gain market share
  • Strong emphasis on assessing disruption-risk as part of commercial diligence
  • Invest only in companies that have established product-market fit and attractive unit economics. 
  • Focus on background checks of owners and key management.
  • Fund management team has extensive experience to check for corporate governance

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Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.