ETMarkets AIF Talk: From Rs 1 cr to Rs 2.3 cr - How Finavenue Growth Fund delivered stellar returns for crorepati investors in 2024

“The investment philosophy of the fund is centered on acquiring growth-oriented companies at median or below-median valuations,” says Abhishek Jaiswal , Fund Manager at Finavenue. In an interview with ETMarkets, Jaiswal said: “We prioritize long-term investments, focusing on industry cycles that are expected to be favorable over a 3-5 year horizon. The fund has a proven ability to identify proxy investment opportunities and market-dominant players,” Edited excerpts: Thanks for taking the time out. Your fund Finavenue Growth Fund has more than doubled in 1 year. What worked for you? The success of our fund can be attributed to the three-bucket strategy we follow, wherein we allocate 20% to unlisted securities, 40% to anchor investments, and 40% to listed securities. While the listed securities currently hold high valuations in the market, we have consistently secured anchor investments at appropriate valuations, resulting in significant returns. For simplicity, 1 cr invested on 1st January 2024 would have turned how much by the end of the year? 1cr invested on 1st January 2024 has turned into ₹2.30 Cr at the end of the year. 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The investment philosophy of the fund is centered on acquiring growth-oriented companies at median or below-median valuations. We prioritize long-term investments, focusing on industry cycles that are expected to be favorable over a 3-5 year horizon. The fund has a proven ability to identify proxy investment opportunities and market-dominant players. We believe that a great company should either drive changes in consumer behavior, transform production economics, or significantly enhance lives. It is very interesting concept. Please take us through the process of picking stocks for the fund. Recently, we invested in Enviro Infra Engineers Limited (EIEL), a company specializing in the design, construction, operation, and maintenance of water and wastewater treatment plants (WWTPs) and water supply projects (WSSPs) for government entities. With the implementation of the Zero Liquid Discharge policy and stricter regulations on water resource management, we see substantial growth potential for EIEL. Any recent IPOs in which you have invested and why? The fund’s perspective on price-to-earnings (PE) is that it represents "perception to earnings" rather than "price to earnings." This perception-driven narrative is assessed through a six-point framework: Total Addressable Market (TAM), government policies, the company’s market share and position in the value chain, promoter integrity, financial health of the balance sheet, and finally, valuation. This methodology enables the fund to identify companies with significant tailwinds and re-rating potential. Companies that are on your investment radar for the year 2025? While specific companies cannot be disclosed, our focus is on sectors such as precision engineering, niche EPC players, recycling industries, power transmission and equipment, and urban consumption themes, including jewelry and asset management companies (AMCs). Which sector constitutes maximum weightage in your fund and why? The fund's key sectors are guided by TAM and favorable government policies. For instance: o Recycling: Supported by the Extended Producer Responsibility (EPR) policy. o Power Transmission: Driven by the National Grid policy and renewable energy CAPEX. o Water EPC: Backed by the Zero Liquid Discharge policy. o Electronics: Supported by the Production-Linked Incentive (PLI) scheme Let me also get your perspective on markets as well. We have closed 2024 on a positive note. How do you see markets in 2025 and any big triggers which you are watching out for? While 2024 was a strong year, we anticipate 2025 to reflect a more consolidated market environment, with sector-specific performance taking precedence. On the global front, geopolitical developments, such as conflicts, pose immediate risks. Domestically, we will closely monitor inflation trends and the upcoming Indian Union Budget for key insights. What about primary market space – do you see it is getting overheated. What are the factors which investors should keep in mind while putting money in an IPO? In the primary market, valuations are increasingly stretched, with unlisted players demanding multiples similar to their listed counterparts. While this indicates some level of overheating, we believe investors should exercise patience with valuations and accept longer gestation periods when approaching the IPO market. A thorough examination of the Draft Red Herring Prospectus (DRHP) and IPO mandate is critical before committing funds. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel )