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