Notes from AVCJ Private Equity Conference – Day 2

Attended the AVCJ Private Equity Conference today as well

Here were the key takeaways:

Rajesh Srivastava,Chairman & MD Rabo Equity Advisors

• Can vouch things are changing for the better in government
• Earlier, has to answer “Why India” to foreign investors.Now this Q is no longer being asked

Srinath Srinivasan,CEO,Oman India Joint Investment Fund

• Investee companies still to benefit from change in government
• Benefits will trickle down in 18-24 months
• Can confidently say that the heart of the government is in the right place

Mohit Ralhan,Managing Partner,TIW Private Equity

• 2 fundamental changes in India
  • Real interest rates in India are now positive
  • Cash is balance sheets of large companies are greater than that in 2007
• This can act as a spur to savings and capex cycle
• Promoters don’t give illiquidity discount in India
• Prefer share repurchases as an exit option

Ruby Arya,Vice-Chairman & Director,Milestone Capital Advisors

• Real estate can give 2x returns not multibaggers
• On the flip side, unlikely investors will lose money in real estate unlike equity
• 14 Billion US $ has come in real estate via PE
• Easier to exit in Real Estate

Sanjay Kukreja,MD,ChrysCapital

• 47 exits since inception
• Exits possible only in a few sectors where liquidity exists
  • Financial Services
  • Pharma
  • Business Services etc
• Exits v difficult in other sectors such as
  • Power
  • Infra
  • Manufacturing etc

Ameera Shah,MD & CEO,Metropolis Healthcare

• Most PE firms can’t add value in terms of business growth and profit margins
• Can add value in
  • Corporate Governance
  • Data Analytics
• Dislike the following about PE firms
  • Unable to state clearly how they are different from others
  • Unable to state clearly if their returns are coming at entrepreneur’s cost
  • Unwilling to put in the same effort/time for their smaller ticket investments as compared to their bigger investments

Pramod Bhasin,Founder & Vice-Chairman Genpact

• PE firms can help in the following areas:
  • Board Formation
  • Compensation Practices
  • Strategy
  • Connecting with potential clients
• Advice for PE firms
  • Get operational expertise
  • Stay in for the long term-don’t exit early

Sanjay Aga,Director,Mahindra Logistics

• PE firms in India have little operational expertise
• Hence unable to identify which companies/sectors can do well
• Hence indulge in “herd like” momentum investiing

Nupur Garg,Regional Lead-PE Funds,IFC

• Performance of Indian PE has been poor as compared to China
• As per Cambridge Associates.
  • Over 10 year period,Indian PE funds have returned 12% Gross IRR while China returned 24% Gross IRR
  • Over 5 year period,Indian PE funds have returned 5% Gross IRR while China returned 25.5% Gross IRR
  • Over 3 year period,Indian PE funds have returned -2.9% Gross IRR while China returned 14% Gross IRR