Unlisted Doesn’t Mean Uncertain: Our Playbook for Investing in Unlisted Companies
Combining conservative forecasting, credible partners, and valuation discipline to avoid hype and capture real upside
The Indian unlisted market is a landscape of immense opportunity and significant peril. While investor interest has surged, recent history offers cautionary tales. High profile companies like NSDL and HDB Financial Services, once traded at euphoric private valuations, ultimately priced their IPOs at a considerable discount, leaving many late stage investors with substantial losses.
This is the predictable outcome when hype supplants discipline and a fear of missing out overrides fundamental analysis. It’s a cycle driven by chasing momentum, not by assessing intrinsic value.
At Nine One Capital, our approach is different. We don’t chase hype or get into bidding wars for today's popular growth story. Instead, we are fundamental investors focused on finding well run businesses with sustainable profits, long before they are discovered by the wider market.
Our Investment Framework: A Non Negotiable Checklist
Our selectivity is not incidental; it is systematic. To date, we have made only two unlisted investments, each meticulously vetted against our unwavering criteria. An opportunity only advances if it meets every one of these conditions:
Proven Operational Strength: We invest in live businesses with revenue traction and operating track records, not in pitch decks or pre-revenue ideas.
Fortress Balance Sheet: Net cash or negligible debt is a must. It’s our shield against volatility and our lever for long term growth.
Defined Path to Liquidity: There must be clear visibility on an IPO timeline, preferably within 18–24 months.
Unyielding Valuation Discipline:
We cap our entry valuation at 10x one year forward, adjusted, and sustainable PAT.
We apply a 50% haircut to management projections by default.
Even on these stress tested numbers, the forward P/E must be in the single digits to early double digits
Preferred Deal Origination:
We prefer direct deals where access and alignment are strongest.
If intermediated, we only engage with investment bankers of repute and an unblemished track record.
We also prefer to invest alongside large, credible funds known for deep diligence and a long term orientation. Their presence is often a mark of quality and reinforces governance standards.
Below the Radar Sourcing: We actively avoid over marketed transactions. Our edge lies in spotting value where others aren’t yet looking.
An Opportunity That Checks Every Box
We have recently finalized one such opportunity in an industry having massive tailwinds.
On our discounted base case estimates, the business trades at a single digit forward P/E with a clear path to listing in the next 12 to 18 months.
Only two companies operate in the same segment in the listed space, both trading at excessive valuations despite slower growth and inferior profitability metrics.
This is exactly the kind of asymmetric setup that we prefer when it comes to investing in the unlisted space.
A Selective and Aligned Partnership
Our strategy is not designed for mass participation. We keep our eyes open for these rare, high quality setups but by definition they are few and far between. When they do emerge, we act decisively and partner only with those who share our investment discipline.
We cultivate a select community of investors who share our long term perspective, appreciate the nuances of private market risk, and possess the capital conviction to execute this patient strategy.
If our philosophy of disciplined, value driven unlisted investing resonates with you, we invite you to express interest by emailing us at gaurav.a@nineonecapital.in.
We will be in touch should we find a mutual alignment in approach and risk philosophy.
Disclaimer: The material on this post is for informational purposes only and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. An investment opportunity with Nine One Capital is available only to a select group of sophisticated investors who meet specific eligibility criteria. Any formal offer will be made exclusively through documents as permissible by SEBI. Offering documents, which should be reviewed carefully.