Recently our firm was retained by a leading US based Hedge Fund with $4.8 billion in invested capital. The fund invested primarily in equity positions both listed and non-listed with a long term bias and a geographical focus on India and Brazil. Noting the growth orientation of the fund our firm was used our proprietary Next Wave methodology to develop a universe of high growth companies in a number of verticals. Additionally investments with other strategic investors would also be considered on a case by case basis. The IRR that the fund was expecting was 35% or greater with a total investment horizon of 3 years. The fund also wanted to insure that their tax liability exposure would be minimized.
The Challenge
While there are numerous companies that fit the type of growth profile we were interested in, many had valuations that made a sustained ROI at the levels we were seeking difficult to achieve. Additionally we were competing with local and international private equity funds for investment opportunities in high value non-listed companies. As a result we had to develop a blended approach so that we could capture the type of IRR that our client was looking for.
The Solution
Using our proprietary methodology and strong local market knowledge we were able to create a portfolio of listed and non-listed equity investment opportunities that would provide high levels of ROI as the multiples were within our range. Within the area of listed companies we identified those companies that would benefit from the convergence of the New Consumer, Technology, Infrastructure and Environment. We were able to execute investments in non-listed companies by leveraging our strong local relationships and by positioning the fund as a long-term anchor investor which would provide significant value to the target company during and after their IPO.