Mint India Private Equity Conclave 2018

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Overview

The country has entered 2018 with the economy facing a few headwinds. The central government is expected to slip on its fiscal deficit commitment, crude prices are firming up and that could lead to rising inflation and the GDP growth this year is forecasted to hit a four year low of 6.5%, not to forget the general elections.

At the same time, industry continues to be faced with the challenge that supply of cash exceeds supply of assets, a situation that makes it even more important to develop convincing and sustainable equity stories in order to put the cash to work. The question then becomes, “how do private equity firms move past yesterday’s challenges, build upon today’s foundation and create the PE firm of the future”?
As we enter the future which is coming into higher definition, it will favour those investors who understand acutely what they do best and how to capitalize aggressively on their strengths, differentiate themselves amid new macro realities and fierce competition.
 
Against this backdrop, Mint organised its highly successful and flagship Annual Mint private equity
conclave where all the relevant stakeholders came under one roof to discuss perspectives and predictions as
we move into 2018.

Highlights

Mint Special-Roundtable Discussion

Indian Private Equity: Moving over uncertainty, Creating the PE firm of the future?

The Indian PE industry entered 2018 on the back of a record year for dealmaking in 2017, which witnessed over $24 billion of private capital being invested in Indian companies. Exits, which used to be a big pain point for Indian PE, too continue to see a strong momentum in the last three years. However, as we approach a general election year, there is bound to be bumpier ride in the near term. The latest GDP projection by the government, projecting a deceleration in the economy to 6.5% is also bound to create anxiety.

Also, with even more capital flowing to private equity funds, investors are seeking increased returns and even higher levels of service. In an industry ripe for disruption, there is increasing pressure on private equity firms to harness and analyze portfolio company data in a way that will benefit investors.

The question then becomes, “how does private equity firms move beyond yesterday challenges; build upon today’s foundation and create the private equity firm of the future?”

What will private equity firms do to be competitive in the future?

How will private equity firm change the allocation of their team’s time?

How are private equity fund managers looking at the macro realties and taking micro investment decisions? Will

the exit momentum continue?

Is the near term deceleration in the economy is a major cause of worry?

With all the reforms, improvement in ease of doing business, Moody’s rating upgrade, has the LP view towards India improved?

Have valuations peake

Fireside Chat

Puneet Bhatia- Co-Managing Partner & Country Head India-TPG Capital Asia


Panel 1- Controlling your own destiny – Realizing exits & operational excellence           

For much of its history, the PE industry has leaned toward a relatively simple value-creation formula: Look for a hot sector or market that is likely to benefit from strong macro conditions or multiple expansions, buy a minority stake in a representative company, wait for top-line growth to kick in and exit at a premium.  The limits of this approach became clear during the global financial crisis, when growth slowed, and aging, subpar companies piled up in regional portfolios, creating a massive exit overhang.

However, more and more PE firms operating in India are becoming control oriented. Given the growing trend of buyouts it is important to understand how GPs are trying to reorient themselves from minority investors to promoters, for lack of a better word. We have seen only a few successful buyout exits in India till now and the jury is still out on the majority of the deals, most of which have happened in the last few years. In this context, a panel of operating partners, professionals and PE investors will discuss what strategies one needs to execute a successful control transaction, create the necessary value and achieve a successful exit.

How different and how much more deep is due diligence when it comes to control transactions as against a minority deal?

How can PE firms drive operational excellence to create value?

What do LPs seek from GPs in terms of operational value add?

Does a control transaction really deliver better returns than minority investments in the Indian context?

Panel II: Private debt- the new mainstream institutional portfolio strategy

Local and foreign investors are jumping to create a private debt market in India. KKR is one of those betting big on the debt space and the global investment firm has a second dedicated vehicle in the market. Closer to home, a host of domestic firms have raised capital for debt funds across a range of strategies – including Piramal, Motilal Oswal and Aion Capital, a joint venture between Apollo Global Management and ICICI Venture. The biggest advantage seen for companies is that they can postpone dilution and still raise capital needed by the business. Besides, private debt is expected to deliver the highest returns over the next three to five years. The strategy is also finding favour among the LP fraternity with PE players increasingly moving to establish offerings and teams to exploit this opportunity.

What are the opportunities available for private debt in India? 

Do promoters prefer private debt to private equity? 

How will the market evolve as both kinds of funding agencies compete for the same deals?

Is private debt set to become an established component in institutional portfolios?

Panel III -India’s Sunrise sectors- where will the next wave of growth come from?

2017 has been the best year for both investments and exits in India, surpassing their respective previous highs. PE/VC investments in 2017 recorded US$26.8 billion across 589 deals, a 37% increase compared to the previous record achieved in 2015. 2017 reported 257 exits worth US$13 billion, almost double the previous high recorded in 2016.  Among others,  growth, startup and PIPE deals witnessed multifold increase in investment flow in 2017 compared to the last year.   Consumer, Banking, financial services and insurance (BFSI), IT and manufacturing contributed significantly to the total deal value. At the same time, competitive intensity in the Indian investment market has progressively increased, and we now have more than 250 participating and active funds. 

– What are the next hot spots for value creation?

– Which are the breakout sectors in your portfolio?

– Private equity firms which once used financial leverage as their main tool for boosting the internal rate of return (IRR) on their portfolio companies are relying more and more on operational improvement as the means of value creation. Is that the new model for value creation?

– The me- too growth private equity market. Is their any juice left?

Private Equity’s transformative role in building businesses – an entrepreneur perspective.

By Yogesh Mahansaria, Founder, Alliance Tire Group

Panel IV: The advent of big money – boon or bane?

In an age of superabundant capital, competition is coming from a wide variety of players, including sovereign wealth funds (SWFs), pension funds and large corporations, such as China’s BAT companies (Baidu, Alibaba and Tencent). An abundance of buyers makes it increasingly difficult to find attractive proprietary transactions in the Asia-Pacific region. That has helped drive already steep Asia-Pacific multiples to unprecedented levels, even as GDP growth slows across the region and interest rates begin to rise, blunting two powerful sources of value.

At the same time, the relationship between GPs and LPs is becoming increasingly complicated as large institutions and sovereign wealth funds devote more and more of their PE allocations to direct investments and co-investments. For instance, Canadians emerged as one of the most prolific dealmakers, particularly for big deals in the financial year 2016-17. From 6 deals in 2015-16, to clinching 12 deals in 2016-17, these investors literally doubled their action. Almost all large Canadian funds such as CDPQ (Caisse de dépôt et placement du Québec) ,CPPIB (Canada Pension Plan Investment Board- the largest pension fund in Canada), Brookfield Asset Management Inc. and Fairfax have on the ground presence in India and have made significant commitments.

What are the aspirations of this long- term, deep-pocketed investors? Are there preferences more inclined towards annuity seeking projects?

Are private equity investors facing more and more competition from their own investors, or are they turning it into an advantage as they might not be able to participate in these deals otherwise?

What has been the return experience of these investors from the region?

How the increase in investment activity by pensions and sovereigns impacting GPs?

Is pension money being considered easy money?

Theme

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Speakers

Abhinav Dhall
Abhinav Dhall, Executive Director, Standard Chartered Private Equity Advisory (India) Pvt Ltd

Atul Kapur- Co-founder & Chief Investment Officer- Everstone Group
Atul Kapur, Co-founder & CIO, Everstone Group

Babar Ali Khan, Overseeing Director Investments, Khazanah India Advisors

Bhavik Damodar – Partner, Deal Advisory & COO, KPMG
Bhavik Damodar, Partner, Deal Advisory and Chief Operating Officer, Advisory, KPMG India

Deepak Shadadpuri, MD, DSG Partners

Harsh Pais, Partner, Trilegal
Harsh Pais, Partner, Trilegal

Harsh Singhal- Director- Growth Markets and Head of India-CDPQ
Harsh Singhal, Director, Growth Markets and Head of India, CDPQ

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Imran Jafar, General Partner, Gaja Capital

Kalpesh Kikani- MD & Sr. Partner, AION Capital
Kalpesh Kikani, MD & Sr. Partner, AION Capital

Kapil Singhal
Kapil Singhal, Fund Manager & Co-Head, Edelweiss Special Opportunities Fund

Kunal Shroff, Managing Partner, ChrysCapital   
Kunal Shroff, Managing Partner, ChrysCapital

M.K. Sinha, Managing Partner and CEO, IDFC Private Equity 
M.K. Sinha, Managing Partner and CEO, IDFC Alternatives Ltd

Manish Kejriwal, Managing Partner, Kedaara Capital                                                               
Manish Kejriwal, Managing Partner, Kedaara Capital

Niren Shah- Managing Partner, Norvest Venture Partners-
Niren Shah, MD, Norwest Venture Partners

Nishant Parikh, Partner, Trilegal
Nishant Parikh, Partner, Trilegal

Nitish Poddar, Head of Private Equity, KPMG 2
Nitish Poddar, Partner and Head, Private Equity, KPMG India

Prashant Purker- Managing Director & CEO , ICICI Venture Funds Management
Prashant Purker, MD & CEO, ICICI Venture Funds Management

Puneet Bhatia, Co-Managing Partner & Country Head India-TPG Capital Asia

Rakesh Sony-Global Head of Strategy and M&A, Tata Global Beverages Ltd    
Rakesh Sony, Global Head of Strategy and M&A, Tata Global Beverages Ltd

Ravindra Bandhakavi, Partner, Trilegal
Ravindra Bandhakavi, Partner, Trilegal

Renuka Ramnath - Founder, MD & CEO -Multiples Alternate Asset Management Pvt Ltd
Renuka Ramnath, Founder, MD & CEO, Multiples Alternate Asset Management Pvt Ltd

Reshmi Khurana, MD & Head-South Asia, Kroll       
Reshmi Khurana, MD & Head-South Asia, Kroll

S Srinivasan- ‎Managing Director Kotak Investment Advisors 1
S Srinivasan, MD, Kotak Investment Advisors

Samonnoi Banerjee, MD, Bain Capital
Samonnoi Banerjee, MD, Bain Capital

Sahil Dalal, Director, Advent International
Sahil Dalal, Director, Advent International

Sandeep Naik - Managing Director and head India & Asia-Pacific - General Atlantic
Sandeep Naik, MD and Head India & Asia-Pacific – General Atlantic

Sanjay Kukreja- Partner, ChrysCapital
Sanjay Kukreja, MD & Partner, ChrysCapital

Shashank Singh - Managing Director - Apax Partners
Shashank Singh, MD, Apax Partners

Srikrishna Dwaram- Partner, True North   1
Srikrishna Dwaram, Partner, True North

Srinath S, Chief Executive Officer, Oman India Joint Investment Fund
Srinath S, CEO, Oman India Joint Investment Fund

Tashwinder Singh, MD, KKR
Tashwinder Singh, MD, KKR

Tarun Bhatia, Managing Director, Kroll 2
Tarun Bhatia, MD, Kroll

Vikram Gupta, Founder & Managing Partner, IvyCap ventures
Vikram Gupta, Founder & Managing Partner, IvyCap ventures

Vishal Mahadevia- Managing Director, Warburg Pincus
Vishal Mahadevia, MD, Warburg Pincus

Yogesh Mahansaria, Founder, Alliance Tire Group
Yogesh Mahansaria, Founder, Alliance Tire Group

Venue and Date

28th March 2018 | Mumbai

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