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

5 replies on “Notes from AVCJ Private Equity Conference – Day 2”

Raoji.. I have been a silent reader of your blog for months. I am glad that I stumbled on this blog. What an amazing job you are doing ! just keep it up

Most disturbing is the last one – very, very low returns from India, in comparison to the one from China for P/E funds – even after 10 year wait. I am hoping that the future returns will be better

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