Ashika's New AIF Taps India's High-Growth Small Cap Engine

MUMBAI, India – December 09, 2025 – As investors navigate the complexities of India's dynamic economy, Ashika Investment Managers has launched a new vehicle designed to harness one of its most potent and volatile segments. The firm has rolled out the Ashika Mid & Small Cap Fund, an open-ended Category III Alternative Investment Fund (AIF), aiming to provide sophisticated investors with structured access to the next generation of Indian enterprise leaders.

The launch comes at a pivotal moment for India's mid-and-small-cap stocks. While these segments have delivered spectacular returns, attracting a flood of domestic capital, they also carry the weight of heightened valuations and regulatory scrutiny. Ashika’s entry with a highly disciplined, research-intensive strategy signals a calculated bet that deep fundamental analysis, not just market momentum, will be the key to unlocking sustainable wealth in this high-stakes arena.

Navigating the Small-Cap Surge: Growth Amidst Volatility

The allure of India's smaller companies is undeniable. In 2023 alone, the Nifty Smallcap 250 index surged by over 48%, significantly outpacing its large-cap counterparts. This rally was fueled by a confluence of powerful structural tailwinds: robust domestic consumption, a government-led manufacturing push through initiatives like "Make in India" and Production-Linked Incentive (PLI) schemes, and the rapid formalization and digitalization of the economy. These forces are transforming once-regional players into national contenders with expanding competitive moats.

However, this explosive growth has not gone unnoticed. Market regulators, including the Securities and Exchange Board of India (SEBI), have openly cautioned about "froth" and stretched valuations in pockets of the small-cap universe. This has created a classic investor dilemma: how to participate in the long-term compounding potential of these emerging giants without being overexposed to short-term volatility and valuation risks.

This is the landscape the Ashika Mid & Small Cap Fund is built to navigate. As Ajay Arora, Co-Chief Executive Officer of Ashika Investment Managers, noted, "Mid and small caps today represent India's most exciting transformation story. Many of these businesses are entering phases of scale, formalisation and profitability that were not visible a decade ago... With this fund, our endeavour is to give investors early access to tomorrow's category leaders."

A Blueprint for Selectivity: The '3R's' and Data-Driven Discipline

In a market segment where narratives can often overshadow fundamentals, Ashika is emphasizing a rigidly structured investment philosophy. The firm's proprietary "3R's" model—focusing on the Right Valuation, Right Vision, and Right Time—forms the core of its strategy. This is further reinforced by a set of stringent, non-negotiable screening criteria designed to filter for quality and resilience.

The fund will exclusively target companies that meet specific quantitative benchmarks:
* Market Capitalization: Above ₹2,000 crore, ensuring a minimum level of scale and liquidity.
* Return on Capital Employed (ROCE): Consistently above 15%, indicating efficient capital allocation and profitability.
* Growth Visibility: Demonstrable potential for earnings growth exceeding 20% per annum.
* Leverage: Prudent and manageable debt levels, reducing financial risk.

This data-driven framework is designed to systematically weed out speculative bets and focus on scalable, well-governed enterprises with clean balance sheets. The approach is explicitly intended to separate enduring performers from what Chief Investment Officer and Fund Manager Paras Bothra calls "short-lived momentum stories."

"Our focus with this fund is straightforward—own stocks where trends of earnings strength is improving, balance sheets are clean, and industry fundamentals support multi-year compounding," said Bothra. "In the mid and small cap universe, separating enduring performers from short-lived momentum stories is critical. We believe in deep bottom-up research and rigorous valuation discipline to ensure that every company we own has a clear path to sustainable value creation."

The AIF Advantage: A Specialized Tool for a Complex Market

The choice of a Category III AIF structure is itself a strategic decision. Unlike widely accessible mutual funds, AIFs are privately pooled investment vehicles designed for high-net-worth individuals (HNIs) and institutional investors. The Indian AIF industry has seen explosive growth, with commitments raised by Category III funds increasing by nearly 14% in the six months leading up to September 2023, reflecting a growing demand for more sophisticated investment products.

Category III AIFs offer greater flexibility than traditional funds. They can employ complex trading strategies, including the use of derivatives for hedging or directional bets, and can take on leverage to amplify returns. This structure allows a fund manager like Bothra to be more nimble and opportunistic, aiming to generate alpha regardless of broader market direction. For investors, it represents a tool for accessing specialized, high-conviction strategies that are not typically available in the retail market.

This new fund joins Ashika's existing stable of alternative products, including the Ashika India Alpha Fund, which also has a focus on mid-and-small-cap stocks. This demonstrates the firm's established expertise and commitment to building out its capabilities in the alternative investment space.

A Legacy of Experience Backing a Forward-Looking Bet

The launch is backed by the considerable resources of the Ashika Group, a diversified financial services firm with a 30-year history. Founded in 1994, the group has grown into a significant player with over $200 million in wealth management Assets Under Advice (AUA) and a track record of facilitating over $250 million in investment banking deals. This foundation provides the stability and deep market intelligence necessary to support a high-conviction investment strategy.

The fund's management is helmed by seasoned professionals. Paras Bothra, the CIO, brings over two decades of experience in Indian capital markets and has been with the Ashika Group since 2005, playing a key role in developing its investment management business. This long tenure and deep familiarity with market cycles are critical assets in a segment known for its volatility. The firm's stated vision of leveraging "cutting-edge technology and data science for identifying the Golds of tomorrow" further underscores its commitment to a modern, analytical approach. By combining deep fundamental research with a disciplined quantitative overlay, Ashika aims to prove that even in a frothy market, selectivity remains the ultimate differentiator.