Anushruti Singh
Her passion is to track what’s going on in the equity markets, that’s how she was inspired to found an investment firm—Chanakya Fund Trust.
“My love for equity investments and business growth drives me to learn and adapt to market trends continuously, enabling me to make informed decisions that benefit my clients,” says Kresha Gupta, a 24-year-old Chartered Accountant (CA) based in Ahmedabad.
Kresha is one of the country’s youngest female investors. And now she is launching an SME-focused fund worth Rs 100 crore. “The fund is called Chanakya Opportunities Fund I, and it’s our first offering,” she tells SME Futures.
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Kresha’s maiden offering is a SEBI Registered Category II Alternative Investment Fund, with a green shoe option of another Rs 100 crore. Kresha’s trust is teaming up with StepTrade Share Services Private Limited (erstwhile Ace Share Services Private Limited) which is the Investment Manager and Sponsor of Chanakya Fund Trust.
“Through Chanakya Fund Trust, we hope to create these small-cap companies implying the blue chip companies of the future,” she asserts.
The plan is to raise Rs 100 Crores in the first year. This is a close-ended fund, and we will be accepting subscriptions for the tenure of 5 years from the first close with a maximum of two extensions of a year each.
Identifying the problem
According to her, the ongoing funding scenario in India is at very interesting point.
It has a thriving startup ecosystem. But at the same time, the current funding scenario is a mix of raising funds through primary markets and private placements. Fundraisers are now actively exploring the options of going public as much as they were looking out for VC or PE firms.
“Because of private placements, the valuation of companies is moving away from a fair valuation. This is creating a bubble because of which many IPOs are still in evaluation with SEBI. Whereas IPOs are becoming more accessible for the fund raisers. DIIs have participated more than the FIIs this time showing the active involvement of Indian Investors. This is a very positive point.
But there are vacuums that can be explored. That’s how this AIF fund came up, she said.
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From managing people’s funds to funding them, it’s an exciting shift for Kresha’s, but she still is a fund manager. “That’s true. Through this AIF, I will be managing the funds of HNI/UHNI’s. It’s just that this will be done through higher investments in SME-listed companies. Investors are not actively investing in SME-listed companies which I feel is a missed opportunity. I have identified profitable investment opportunities in this untapped market which can generate higher return,” she elaborates.
Who can get the funds
The fund will invest in profitable SME companies with high-potential opportunities in unorganised sectors. About 51 per cent of the corpus will be invested in unlisted SME companies, termed startups in manufacturing, consumer products, and technology.
The fund will provide exit opportunities through primary markets as it intends to invest in companies that have the potential to get listed on SME exchange with small ticket size IPO. In addition, Chanakya Opportunities Fund I is a closed-ended scheme that plans to invest in 25 odd companies with a ticket size ranging from Rs 2 crore to – Rs 10 crore per company.
“This 51 per cent will go to those private companies that have the potential to get listed on SME exchange within next 12-18 months. 24 per cent of funds we will invest in those companies that are already listed on SME exchange and have the potential to migrate on main board, up to 25 per cent in small cap SME listed companies with low price to earnings ratio (PE),” she tells us.
From where investment fund will be sourced? Deal sourcing will be done through the network of various set of people. “The capital will be raised through resident and non-resident Indians, high-net-worth individuals (HNIs), banks, accredited investors, corporates, and trusts,” she tells us.
The trust will follow a strong filtration and due diligence process to identify the best investment ideas. Implying winners has to undergo a stringent process. What she’s looking for—integrity, vision, passion, decisiveness in an entrepreneur.
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These are the key characteristics, says Kresha. While Deal execution will be done basis a thorough criteria. We are looking for high quality management teams that have both depth and breadth for quality execution and multiple centers of competence. Their focus on fundamentals i.e. high growth potential underpinned by structural under penetration. Vertical chain for the companies – checking the suppliers and customers and of course strong corporate governance. The third step will be active portfolio monitoring – leveraging our expertise to provide strategic and operational advice to investee companies, she adds.
In addition, investors with a time horizon of greater than one year can look at investing in this scheme.
Trust is looking forward, how this AIF product is going to pan out. While the firm’s goal is to create world-class investment products at competitive costs for investors in Indian markets. “For future, my game plan is to create an AMC. A company having different arms like AIF, Portfolio management company, merchant banking, etc,” Kresha enthuses.
