Corporate managers seek new rush in PE

From FMCG to the financial sector, an increasing number of veterans are joining private equity or venture capital firms.

It's the new rush of adrenaline that's sweeping corporate boardrooms. As private equity players become bolder in India, they are cherry-picking the best talent to help them nurture new entrepreneurial stories and spot the next big investment theme.

In the past six months, the flow of those leaving the comfort of their organisations to enter the private equity or venture capital space has gathered momentum.

And the exodus has been across the board, from FMCG to financials.

The examples of Wipro's former boss, Vivek Paul (he joined TPG then launched his own fund, Kinetic Glue), and Unilever's Vindi Banga (who moved to Clayton Dubilier & Rice) have clearly influenced the trend.

Among those trying their hand in the PE space: Ram Ramasundar (former CFO, Pepsi India), Ashok Juneja (former corporate director, Bharti Group), Prakash Kulkarni (former MD, Thermax), Rohit Kapur (fomer executive director, KPMG India), KG Subramanian (former senior VP, Kotak Mahindra Investments) and Tapan Gandhi (former head of corporate development & strategy, Lehman Brothers).

According to industry experts, those with operating experience in the corporate world are much sought. Shujaat Khan, managing director, Blue River Capital, which hired Ramasundar, said: "His experience in growing brands into large, leadership positions will play an important role in advising our funds on how to identify and evaluate high-growth investment opportunities and assist them in achieving leadership in their respective markets."

Ramasundar, who joined Blue River in the middle of December, has more than 30 years of operating experience across the globe.

Besides stints with Hindustan Lever and Unilever, he was CFO at Pepsi-India, CEO at Electrolux-India and CFO at Ranbaxy.

"Compared with other corporate jobs, PE is seen as unique, offering multiple returns, an interesting lifestyle as well as exciting challenges such as turning portfolio companies profitable. There are plenty of opportunities in the PE space today," said Sunit Mehra, MD, Hunt Partners, a headhunting firm specialising in PE and VC.

In the past, PE players like Actis had in-house entrepreneurs advising them on running the companies that they bought. Typically, these consultants were also mandated to generate and manage new deals.

So, Actis brought on board UDV's former boss, Deepak Roy, and N C Venugopal from Parry's. But now funds are looking at long-term recruitments.

Experience in corporate finance or managing relationships with banks and other financial intuitions certainly come in handy.

Fund-raising by PE players in 2010 has grown about 65 per cent, compared with last year. In real terms, this means $13 billion was raised by 27 funds, against $8 billion by 22 funds in 2009.

There has also been a more than 80 per cent growth in PE and VC investments in India: 2010 witnessed 348 deals worth $8 billion, against 317 deals worth $4.4 billion last year, according to VCCedge data.

"Successful businesses require flawless execution capabilities, with a sharp focus on critical business drivers and key success factors. Long experience across multiple industries of stewarding operations would add great value to PE investee companies and ensure that the investments deliver the desired outcomes. This would be a win-win situation for both the PE and the investee companies," said Ramasundar.

Early this month, Kapur, former executive director and head of India at KPMG corporate finance, joined as managing director at Arka Capital, started by former Warburg Pincus managing director Rajesh Khanna.

"The environment has evolved to a stage where entrepreneurs are now looking beyond just the capital to a more comprehensive assessment of the value-add that the PE asset class brings to his business. This maturation of the industry has thrown up interesting challenges for investment firms," said Kapur.

"A well balanced team with multi-dimensional perspectives and skill- sets is well placed to differentiate itself and provide the counsel that entrepreneurs need in this fast-paced environment," added Kapur, who spent about eight years at KPMG and was involved in M&A advisory, valuation services and debt syndication.

In November, Bessemer Venture Partners appointed Juneja, former corporate director of Bharti Group, as its operating partner in India.

With 30 years of telecom and operations experience, Juneja was instrumental in developing the telecom tower business as well as in rolling out Bharti's operations in eight new circles.

Last month, Nexus Venture Partners hired Kotak's Subramanian as CFO. In his 14-year stint at the Kotak Group, Subramanian was part of its asset-liability, risk management and operating committees.

Tapan Gandhi, former Lehman Brothers head, said, "In a corporate role, I can have an impact on one company. Here, I wanted to have a broader impact by bringing in my cross-functional experience, along with capital to help many companies scale-up.

Indian entrepreneurs have amazing zeal and it is exciting to partner with them by leveraging my experience at leading world class-firms to create value. These factors made a PE fund a natural choice."

In August 2010, Gandhi, who is former head of corporate development & strategy, Lehman Brothers, joined as principal-investments at Pravi Capital, founded by former ICICI Venture veterans Jayanta Banerjee, Anand Vyas and Sunay Mathure.

Two months ago, private equity major Advent International has appointed former Thermax managing director Kulkarni to its operating partner programme.

He is to advise Advent on Indian opportunities to help further the development of the firm's presence in India. Kulkarni worked for seven years at India's largest private sector boiler manufacturer.

Jitesh Gadhia, former managing director and head of advisory at Barclays Capital, has joined Blackstone Group recently as a senior managing director in its corporate advisory group, though he will be based in Blackstone's London office. Clearly, PE is the new green pasture for India Inc's best and brightest.