WE ARE BAY. THE INDIA INVESTMENT EXPERTS

INVESTMENT STRATEGY & PROCESS

Investment strategy

Concentrated, Bottom-up, Buy and Hold Strategy

Portfolio of upto 30 businesses

Business owner’s mindset

Absolute return oriented

Low Portfolio Churn

Wealth generation is not in buying and selling but in “holding”

Better management of expense ratio and taxation for investors

Sell Discipline

Deviation from our original Investment Thesis or Corporate Governance Guidelines result in a “sell”

Buy high quality businesses - Growth at a Reasonable Price

Quality franchises with strong corporate governance frameworks

Focus on companies with sustainable earnings and high RoCE (Return on Capital Employed)

Flexibility and Ability to do Late-Stage and Pre-IPO

AIF CAT III structure allows us to do privates with strong execution capabilities

Devil's Advocate

We ask ‘Why should we not invest?’ to help us understand things that can go wrong and avoid being blind-sided

Investment Process

  • An institutionalized replicable process
    • Initial Universe 01
    Basic Screens

    ≥ $200Mn market cap

    ~1,000
    Businesses

    Primary Filter 02
    Fund Screens

    • Average ROCE > 20% in the last 10 years

    • Eliminate companies with :

    • – Known Corporate Governance issues
    • – High capital intensity and/or non-scalable businesses
    • – We know what we want to avoid
    We WILL NOT own any infrastructure, real estate, commodities and other capital intensive, cyclical business

    ~200-250
    Businesses

    Fundamental Analysis 03
    Individual Business Review

    • In depth preliminary & primary research including

    – Strong franchises with dominant intangible assets (i.e. brand, distribution and technology)

    – Large headroom for growth through penetration and premiumization

    • Risk analysis via Devil’s Advocate Program

    • Detailed due diligence to validate thesis and mitigate risks

    ~50 – 60
    Businesses

    Portfolio Construction 04
    Team Review

    • Diversification considerations

    • Position size management

    • Portfolio risk profile

    • Valuation comparisons

    ~20 – 30
    Businesses

    Adherence to our principles

    What We Do
    • Consumer
    • Consumer Tech
    • Technology
    • Financials
    • Pharma
    • Outsourcing (manufacturing, logistics)
    Invest in businesses which are:

    Asset light and don’t require much capital to grow

    Capable of reinvesting Free Cash Flow at similar or higher RoCE (Return on Capital Employed)

    What We Don’t Do

    Commodities

    Real Estate

    PSU’s / Government dependent Businesses

    Infrastructure

    Promoters with a dubious track record / Corporate Governance issues

    Avoid businesses which are:

    Capital intensive and cash guzzlers requiring frequent dilution

    Commodity and cyclical in nature which requires timing the market