Venture Intelligence - APEX'12 Summit

February 13, 2013, Mumbai

Summit Highlights

Supported by

View Event Videos on

View Event Photos on

Sound Bites:

On Government & GAAR

“If we were to shut down the Mauritius route (for investments), there is a real danger that we will destroy Private Equity in the country. And it's not just PE; the recent tax claims against MNCs like Shell, Microsoft and Nokia pose a much bigger question on overall FDI. What does it take for a company like Walmart with over $450 billion in sales to write off India for the next 10 years? I would say not a lot. But can we as a country - with our deficits running so high - afford it?
We are playing with fire here.”

- Ashish Dhawan, ChrysCapital

“There has been way too much arrogance on the part of government. The same story is told of how this is a country of 1.2 billion people, the positive demographics, etc. The assumption is 'Where else will foreign investors go?' But when your (government's) basic execution is so poor - in terms of land acquisition, stability of policy, honoring of agreements, etc - investors will not continue to buy the story.”

- Vijay Pattabhiraman, JP Morgan

“The sense of complacency - in terms of assuming foreign investors somehow have to invest in India - has cost us dearly in the last couple of years. It was very clear at the recent World Economic Forum at Davos that India has lost favor with international investors. India's image has been over sold and it's high time we start delivering on those claims. Even the larger Indian corporates are deploying their incremental investments in countries in Africa, Indonesia and other emerging economies. So, why would foreign investors bother to invest here?
We need a credible India and not Incredible India.”

- Sandeep Naik, General Atlantic

“I have always told my international colleagues that India will not be a linear growth story - we will take three steps forward and two steps back. And hence, if we take a long term view on the country, we will do well. But with the governance crisis over the last few years and with elections looming (especially with expectations of an uncertain mandate), I'm super cautious now.”

- Akhil Gupta, Blackstone Group

“From an Entrepreneurs' perspective, Singapore is a great place to operate from. If you are starting a (VC fundable) venture now, I would recommend having your headquarters/holding company in Singapore and making your Indian operations operate as a subsidiary of that. Singapore also has highly credibile image and is not looked upon as a tax haven.” - Sesh A.V., Basiz Fund Services

On Corporate Governance

“In the 13 years that I was actively making Private Equity investments in India, I didn't see any improvement in corporate governance - if anything, it may have declined. What SEBI is doing to step up protection for minority shareholders is good, but the regulators should take much larger steps. If minority investing - which is still the bulk of the PE market in India - has to be successful, corporate governance has to improve quite significantly.”

- Ashish Dhawan, ChrysCapital

On Early Stage Investing

“Accelerators should not try and be all things to all people. They are great for fast moving businesses - like Internet, Mobility, Cloud-based technologies, etc. - which need things to be put on a fast track. But you cannot accelerate anything for a Retail consumer company. That message is getting mixed up in India. Companies that require longer gestation and diligence (to solidify their business model) - like ventures in Cleantech, Medical Devices, etc - should go to incubators. Angel networks are good for very domain specific businesses where the entrepreneur is fairly seasoned and already knows what they want to do. Seed funds can bet up to a $1 million even on concepts, but need to see full fledged teams.”

- Sateesh Andra, VenturEast Tenet Fund

On Exits

“India is a seven-year-hold (holding period) market - as against the typical 5-year-old market - to get the targeted returns. In that time there will be some things - whether regulation or policy or something else - that will take your projections off course and you need to to bring things back in line.”

- Sandeep Naik, MD, General Atlantic

“The bulk of the exits in the next couple of years - barring the few IPOs that we might be able to pull off - is going to be via secondary transactions. Wherever the fundamentals of the business are sound, even if the growth projections have not panned out exactly as planned, the new investor will look at it with a three year timeframe by which time the markets would be more receptive. ”

- Arun Uday, Headland Capital

On Sectors

“At this point, I'm much more bullish on Real Estate investing than regular Private Equity in India. The valuations have come down to reasonable levels and there are properties being bought for below their replacement costs. You can't go wrong when you have a situation like that. ”

- Akhil Gupta, Blackstone Group

“I'm not sure for how much longer the pure consumption story - which is based purely on past investment cycles - will hold. If we go by the lower volume growth numbers put out by the top FMCG players and also the same store sales of pizza chains and other dine-in restaurant chains, we are seeing signs that discretionary expenditures are being cut. While consumption is indeed a safe place to bet on, I think the valuations will contract.”

- Subhasis Majumder, Ascent Capital