Compounding Asset Partners in talks to raise Rs 350 crore at Rs 1,200 crore valuation

The capital will be used to establish an asset management company and apply for a mutual fund licence under the Securities and Exchange Board of India's (SEBI) alternative eligibility framework. The transaction is likely to be completed in two tranches. The first will involve investments from prominent corporate executives, C-suite leaders and Shah, while the second, involving private equity investors, is targeted for completion in June, the sources said.

Several private equity firms are understood to be competing for an allocation in the proposed fundraise. Discussions are at an advanced stage, though the final valuation, investment commitments and legal documentation are yet to be concluded. If successful, Compounding Asset Partners could become one of the few newly established investment firms to apply for a full-fledged mutual fund licence within its first year of operations.

SEBI's alternative route Compounding Asset Partners plans to use SEBI's alternative eligibility framework, which allows entities without the profitability track record required under the conventional route to seek registration as mutual fund sponsors. Under the traditional framework, sponsors are generally required to demonstrate a five-year track record in financial services and meet prescribed profitability criteria, including an average annual net profit of at least Rs 10 crore in the preceding five years.

The alternative route permits applicants without the required profitability history to seek registration, subject to additional conditions, including a net-worth requirement of Rs 150 crore for the asset management company and requirements relating to experienced management. The proposed Rs 350-crore capital infusion would provide Compounding Asset Partners with the financial resources to pursue the regulatory application and build its investment and distribution operations.

Approval would, however, remain subject to SEBI's assessment of the sponsor and compliance with the prescribed eligibility requirements. Shah has spent more than 18 years in India's capital markets, building his career across equity research, fund management and investment leadership. He began his career in institutional equity research at Religare Capital Markets in 2008 before moving to Edelweiss Securities in 2010, where he covered midcap companies.

He subsequently joined Motilal Oswal's institutional equities business, heading midcap research before moving to its asset management arm in 2018. At Motilal Oswal AMC, Shah emerged as a prominent fund manager, overseeing schemes including the Motilal Oswal Midcap Fund and Motilal Oswal Flexi Cap Fund. He was elevated to chief investment officer in April 2024, taking responsibility for the fund house's equity investment strategies.

During his tenure, Motilal Oswal's equity assets under management expanded from approximately Rs 12,000 crore in 2020 to more than Rs 1.75 lakh crore in 2026. Shah took charge of Motilal Oswal Midcap Fund in July 2020, when it was in the fourth quartile, and helped improve its ranking to first across time periods by December 2025. During this period, its AUM grew from Rs 1,200 crore to Rs 40,000 crore.

The flexi cap, multi cap, business cycle and large & midcap funds managed by him also achieved top rankings. By December 2025, around 98 percent of the fund house’s AUM was in top-ranked schemes, while overall AUM had grown from Rs 12,000 crore in 2020 to Rs 1.75 lakh crore. Shah's investment approach has centred on identifying structural growth opportunities and turnaround businesses through concentrated, high-conviction positions.

His investment calls included companies such as CG Power, Tube Investments, Persistent Systems, Coforge and Zomato, some of which subsequently delivered returns ranging from fivefold to thirtyfold over a five-year period. In January 2026, Shah moved from his role as CIO to become managing director of Motilal Oswal's principal investments business as part of an internal leadership restructuring. He left the group in July after 14 years to set up his independent investment venture.

Compounding Asset Partners is expected to focus on research-driven investing and long-term wealth creation for retail and institutional investors. The proposed fundraise, if completed, would mark the first significant step in Shah's attempt to establish an independent mutual fund business in an industry that continues to attract new entrants amid growing household participation in financial markets.