Marcellus PMS – Rising Giants

Fund Snapshot

Investment Philosophy

At Marcellus, Their Purpose is to make wealth creation simple and accessible by being trustworthy and transparent capital allocators. Their philosophy at Marcellus has evolved from the ideas of Kirby and Thiel, which we have refined further.

Investment Philosophy & Methodology

Marcellus believes in producing wealth with simple and accessible means. Marcellus aims at designing a transparent and trustworthy system for its investors. Their investment approach is based on three primary pillars:

Clean Accounting

Clean Accounting is the initial stage of choosing the best companies. Here Marcellus has over six years of consolidated financials for the universe of firms. Then comes the ranking and comparing part of the firms. Clean accounting framework is taken from Howard Schilit’s legendary text on forensic accounting, “Financial Shenanigans.”

Capital Allocation

The next stage involves building portfolios and holding them for the subsequent ten years without any churn. A return of 20%-30% per year can be expected from this exercise. Portfolios with such volatility are similar to those with Government of India bonds.

Competitive Advantage

The final stage includes judging companies based on their management teams. Marcellus looks for companies with focused management and companies that have deepened their competitive moats over time.

The advantage of the above philosophy can be seen in their returns. The power of compounding becomes strong with such a philosophy. Also, this methodology reduces transaction costs and has aided in overcoming the pitfalls.

Unique Feature

The construction of the Marcellus Rising Giants Portfolio makes it special. Marcellus Investment Managers builds a portfolio of 15-20 businesses from a universe of 450+ companies that pass their capital allocation, forensic accounting, and bottom-up stock selection criteria.

• The universe: Stocks with Market Cap between US$500mn -10bn (about 450 companies)
• Forensic Accounting Screen – Eliminate companies with sub-par accounting
• Filter sustainability of fundamental parameters like revenue growth, ROCE, reinvestment rates
• Bottom-up research and analysis
• 3rd party/channel checks, management meetings
• 15 Rising Giants

Investment universe: Listed companies in India in the USD 500m – 10 bn market cap range.

1. Clean books and effective government.
2. Firmly defended market leaders in specialized industries that consumers haven’t fully explored.
3. Proven track record of capital allocation with significant investments in the core business and ongoing attention to growth-oriented adjacencies

Fund Structure

Fund : ‘Marcellus Rising Giants Fund’ (‘Fund’) is an open-ended CAT III AIF scheme with an AUM target of raising at least Rupees Twenty Crores or such higher amount as thought fit by the Investment Manager

Term : The Rising Giants AIF is an open-ended fund

Structure : Marcellus Capital Trust (“Trust”) is formed in India as a contributory determinate trust set up by the Settlor under the Indian Trusts Act, 1882 and has received SEBI’s approval as a Category III AIF. Marcellus Rising Giants Fund is the first scheme of the Trust. Marcellus Investment Managers Private Limited is the sponsor and the investment manager of the AIF. Vistra ITCL (India) Limited is the trustee to the Trust.

Minimum Investment : For new clients – INR 5,00,00,000 (INR Five Crore) For existing clients – INR 1,00,00,000 (INR One Crore) subject to overall AUM with Marcellus (including AIF) totalling to at least INR 5cr.

Lock-in Period : 15 months from date of each capital contribution in the fund