approach

Investment Focus

VAARAD’s investment criteria are not confined by heavy reliance on certain industries. The existing portfolio and areas of interest encompass a wide variety of areas and especially newer technologies and business ideas.

VAARAD can boast of their capabilities to add exemplary values in following industry areas, where VAARAD management has deeper insight, knowledge and have contributed well in enhancing shareholder's value.
Business & Financial Services
Consumer, Distribution & Logistics
Healthcare & Life Sciences
Industrial Technology
Information & Media Technology
Surveillance and Security Technologies
Fast Moving Consumer Goods (FMCG)

Proposition Sourcing

VAARAD so far had been, incubating and investing into own ideas. With exemplary success from these innovative ideas in last three years, and enhancing and multiplying values for various stake holders, VAARAD has now started looking out for investment opportunities in young, dynamic, trend setting business idea companies/opportunities run by good promoters.
 
VAARAD’s investment process starts with the sourcing of deals. Being innovative, addressing SME sectors in specific niche areas for investments, focusing on next generation high value generating investment propositions, VAARAD attracts investment proposals and deals from entrepreneurs, management teams, promoters and intermediaries. Deals are also directly sourced from industry contacts by the management team. Besides, VAARAD also leverages its network with various investment banks, fund investors, individuals and consultants. 

Evaluation and Investments

Lasting Investments Begin with Solid Ideas 
 
In the confusing world of venture capital and private equity, it can be daunting to be tasked with developing a structured investment approach. At VAARAD, we balance our investment structure to address both the needs of the portfolio company and the liquidity requirements of an investment fund. Unlike an investor in public equity securities who purchases an existing security in the marketplace, VAARAD negotiates and structures its investment to leverage features that enable management to have considerable latitude in daily operations.
 
VAARAD makes "positioning investments," thus leveraging our investment capital to attract significantly greater financial resources from extensive relationships with institutional investment funds and private capital sources.
 
Our ultimate objective is to create value for all shareholders and therefore liquidity time horizons may differ. This gap is bridged by using a combination of features, which may include a preference on sale or liquidation in order to provide a measure of protection against loss, as well as covenants designed to provide greater powers in the event of poor performance and ability to accelerate sale of its position. 
 
To this end, a variety of securities can be used and capital and debt can be structured.

Early Stage

VAARAD will only consider financing competent management/promoters, who have demonstrated success in building companies, and, preferably, those who have generated liquidity for themselves and their shareholders. Portfolio companies must meet rigorous criteria and demonstrate a demand pull approach to marketing, i.e., products or services sold to the consumer, OEM, or direct to the business user must be in "demand" because of quality, price, performance and/or service features.

At this level, VAARAD focuses attention on the operating efficiencies necessary to support growth in increments. VAARAD helps management establish milestones in response to a constantly updated Business Plan. The Business Plan serves as a dynamic operating roadmap monitoring the following crucial aspects of the business:
Breakeven
Cash Flow
Manufacturing/Servicing  Capacity
Team Building
Personnel Recruitment

A strong foundation can help assure profitable growth, proper spending of cash resources, raising follow-on capital at the right time, and recruiting to fill-out the management team.

Special Situations

VAARAD's investment objective in these later stage opportunities is to partner or act as a sponsor with competent management/promoters in business expansion through timely execution of financing the appropriate capital structure, contributing to formulating business strategy and regular monitoring operations through board or advisory participation.

VAARAD invests its capital and then works with management to raise subsequent funding through our extensive relationships with private and institutional investors. With VAARAD's guidance, companies have demonstrated their ability to raise additional capital. Special Situations represent a broad spectrum including:
 
Venture Capital Expansion, which is the providing of working capital as a company approaches breakeven and/or seeks to rapidly move beyond breakeven.
 
Mezzanine Expansion financing is generally associated with profitable company expansion, and may include product line extensions, industry consolidations and acquisitions.
 
Leveraged Transactions are principally associated with either leveraged/management buyouts or recapitalizations to enable private/family businesses to provide liquidity for retiring owners or estate planning.
 
Small and Mid-Cap public companies with capitalisations under Rs. 500 Crores out-of-favour due to the contradiction of research reports and additional demand from perception issues, not being addressed by the present management/promoters.
 
Nevertheless, value exists in such companies at this level and raising capital through Reverse Mergers and it also minimizes the time and cost of obtaining capital for expansion.

Post Investments

A key rationale for any of VAARAD's investments is that we feel we can add value not only by providing capital, but also by being actively involved with strategic oversight and general support to management, so that we can assist in value creation post-investment. We will therefore expect to be involved with the companies in which we invest after the investment.
 
Our involvement will primarily be via the Board of Directors where we will expect to get one or more seats, often assuming the role of non-executive Chairman. Occasionally we may take a more active role, including assisting management as consultants in specific areas, or by serving as informal speaking partners to management, or taking on other roles that may make sense on a case by case basis.

Some of the areas on which we focus our work in this context include:

  1. Strategic development and oversight;
  2. Recruitment and retention of key managers and senior advisors;
  3. Improving the Board of Directors and its ability to support the business;
  4. Including recruitment of additional directors with complementary skills;
  5. Development of the work within the Board and other improvements to ensure we maximize the benefit the Board can provide management and the company;
  6. Guiding management to ensure that they grow with the company and that they develop the ability to handle the different challenges they will face when managing a larger and more complex operation as the company grows;
  7. Introduction of systems, policies and procedures to ensure development of the organizational structure as the company grows;
  8. Development/improvement of financial and IT systems including development of key measurements for monitoring of progress;
  9. Looking for ways to maximize revenue from existing customer bases and broaden revenue streams by identifying new business lines;
  10. Leading acquisition or joint venture initiatives;

Managing and enhancing value perception of the brand and the company. 
 
VAARAD has a separate arm called The Mentor Capitalist for providing and enhancing values for the above mentioned management support services.

Exit Policy

Any private equity fund's ultimate goal is to sell or "exit" its investments in portfolio companies for a return, known as internal rate of return or "IRR", in excess of the price paid. These exit scenarios historically have been an IPO of the portfolio company or a sale of the company to a strategic acquirer through a merger or acquisition (M&A), also known as a trade sale. Increasingly, more common has been a sale of the portfolio company to another private equity firm, also known as a "secondary sale".

VAARAD is no exception to this business compulsion.  VAARAD looks at 18 to 36 months horizon for part of full exit. However this decision is subjective and varies from investment to investment.

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