Spin Off Fund

Objective

The fund seeks to generate superior risk adjusted returns relative to market indices by investing in stocks of companies undergoing Spin-offs. Typically, such an action by the company will help remove the holding company discount that the market attributes and thereby enhance the stock’s valuation. Unifi’s proposition is to gain from the information asymmetry linked value-price mismatch, by closely tracking the entire Spin-Off process and investing in such companies after a detailed review of their fundamentals.

Stratergy and Investment Universe

Our universe is built from the Spin-offs approved by Boards of respective companies as filed with the stock exchanges. At any point in time, our portfolio may include 20% of companies that may not have publicly announced a demerger but we believe, through our primary research, are close to doing so. From the universe of such companies, we would select ideas to invest based on a bottom up approach that we have been practicing over the last fourteen years.

Portfolio Structure 

The fund will operate on the PMS platform where the investor’s assets will remain either in cash with a bank/liquid fund (pending deployment), or if deployed, in the form of stock with CDSL. In either case, the assets will be under the investor’s name. The fund would remain open ended, but it would be advisable to keep an investment perspective of 36 months to provide enough time for the market to price the impact of Spin-offs. The fund would build a portfolio of about 10 companies, where the exposure to any chosen sector will usually not exceed 30%. While the tracking and monitoring of the investments will be active, the activity at the account level will be passive, resulting in lower transaction costs and better post-tax return.