Investment Philosophy
Sector Agnostic
At Nandan Growth Fund, we follow a sector-agnostic approach, therefore our expertise ranges across diverse industries, focusing on potential and performance rather than specific sectors. Sectors include:
Information
Technology (IT)
Financial
Services
Retail
& E-commerce
Energy
& Utilities
Agriculture
& Agribusiness
Transportation
& Logistics
Education
& Training
Consumer Goods
& FMCG
Healthcare
& Pharmaceuticals
Manufacturing
& Industrial
Telecommunications
Media
& Entertainment
Hospitality
& Tourism
Automotive
What do we look for before Investing?
Nandan Capital has defined a clear standardized strategy when it comes to screening companies: A standalone deal is considered for further due diligence if it abides with atleast 4 out of these 6 criteria:
Operating
history
Annualized
revenues
Adjusted D/E
Overdue
receivables
Founder
experience
Profitable/
cash runway
Sectors We Avoid
Deep Tech
Requires significant technology expertise to evaluate long gestation period, usually binary outcomes
Govt Focussed Revenue
Could face payment delays, high possiblity of litigation, may have impact based on Govt changes
Unit Economics Negative
Growth at negative economics is taboo for a debt fund. Unlike Venture Debt, the focus is on profitable growth, not valuation driver growth
Capital Projects
The focus is on Performance credit, allowing easy instalment based returns of principal as well. Bullet repayment structures remain risky for us unless backed by significant collateral and existing cashflows
Prior Disbursement Samples
Leading women's ethnic brand of East India
- Need for expansion capital
- Bank limits exhausted - but expansion through COCO stores, requiring capital
- Analysis: Hight ROCE, comfortable interest coverage ratio, High store level profitability, expansion would significantly add to operating leverage benefits.
- Security: Working capital, brand, inventory, personal guarantee
Electronics manufacturer on route to SME IPO
- Electronics supply in Northern India (Offline channels)
- YoY growth of 50%+; Bank limits exhausted; Need for working capital
- Analysis: High ROCE, comfortable IC Ratio, comfortable DE Ratio, IPO documents ready, strong distribution chains across markets, very little credit sales/ outstandings
- Security: Working capital, brand, personal guarantee
Fast Fashion Retail chain (South India)
- Need for working capital for opening new stores before Diwali season - YoY growth of 60%+
- Bank limits exhausted
- Analysis: High store level ROCE, slightly EBITDA negative at corporate level but each store exceptionally profitable, with high ROCE and only 3 more stores needed for BE. Equity already locked in.
- Security: Working capital and inventory, brand, personal guarantee