ICICI Prudential Equity Opportunities Fund- Category III AIF

The investment objective of ICICI Prudential Equity Opportunities Fund- Category III AIF is to provide long term capital appreciation and generate returns by investing predominantly in listed equity and equity related securities across market capitalization through ‘contrarian investing’.

Contrarian investing also includes investing into businesses enjoying some economic moat, companies in sectors with high barriers to entry and/or undergoing special situations or in the midst of unfavorable business cycle.

ICICI Prudential Equity Opportunities Fund- Category III AIF aims to invest in domestic companies across all sectors that have potential for meaningful growth and which have a certain sustainable competitive advantage.

ICICI Prudential Equity Opportunities Fund- Category III AIF may aim to have optimal diversification across market capitalization with the opportunity to be overweight in large cap, mid cap or small cap stocks at any point of time to potentially generate higher alpha. The Fund Scheme may invest not more than 10% (ten percent) of total assets of the Scheme in unlisted equities, as may be deemed appropriate by the Investment Manager.

The investment philosophy of ICICI Prudential Equity Opportunities Fund- Category III AIF follows:

• Long term contrarian view
• Focused on high active share v/s BSE 200
• No style constraint
• Focused on company potential

The investment strategy of ICICI Prudential Equity Opportunities Fund- Category III AIF follows the below-mentioned steps:

1. Initial in-house screening of over 2500 companies
2. Narrowing it down to actively covering about 500 companies that meet the initial criteria
3. Applying the BMV filtration and narrowing down the universe to about 100-150 companies
4. Identifying companies based on prevailing opportunities and bringing the universe further down to 45-50 companies
5. Portfolio construction of 25-30 companies

3D Benefits of the AIF Structure:

1. Defined Tenure: ICICI Prudential Equity Opportunities Fund- Category III AIF has a defined tenure of 4.5 years, which can be extended by 1 year. There are many potential opportunities to invest in and ideas that are likely to play out within this set timeframe. The defined tenure helps the Investment Manager to focus on targeted investments.
2. Defined Capital Rise: ICICI Prudential Equity Opportunities Fund- Category III AIF has a target size of Rs750 crore, with a green shoe option of Rs 750 crore. With a defined size, the Investment Manager aims to focus on postion-sizing for better potential outcomes.
3. Drawdown Structure: Capital contributions will be drawn down. Multiple drawdown options (as mentioned in PPM). This helps investments in the Scheme in a systematic manner, that aims to generate positive returns. The Investment Manager may call for a drawdown at its discretion, depending on market environment, amongst other factors.

Key Risks: The key risks involved in investing in ICICI Prudential Equity Opportunities Fund- Category III AIF are:

1. Risks to Discovery: Impact from subsequent disruptions may result in government resources being more focused on healthcare leading to slowdown. Global slowdown, rising inflation, crude oil, interest rates could pose as risks.
2. Concentration Risk: The Scheme may hold only a limited number of investments, which could mean more concentration and higher risk.
3. Company / Sector Risks: Macro slowdown affecting near term growth profile, Untoward events such as natural calamities resulting in near term uncertainty, Company specific events such as factory shutdown, lack of positive triggers/events in near term, raw material price movement turning unfavourable.
4. Strategy specific Risks: There could be time periods when securities, which could include mid & small cap companies selected based on their relevancy to the contrarian investment style followed may underperform relative to other stocks or the overall markets. This could impact performance.
5. Valuation Risks: Emergence of roadblocks such as company specific issues, adverse government policies and bleak global macro environment etc warranting for lower than historical valuation multiple.

• In 2024, ICICI Prudential PMS Contra Strategy was awarded 2nd as the Best PMS across all categories, on a 5Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2023, ICICI Prudential PMS Contra Strategy was awarded as the Best PMS across all categories, on a 1Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, ICICI Prudential Long Short Fund, a Cat III Long Short AIF, was awarded as the Best AIF in the Cat III Long Short category, on a 2Y Absolute Returns basis. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.