This Q&A first appeared in DNA Money edition on Thursday, October 6, 2011.
Devinjit Singh, managing director, The Carlyle Group, speaks about the latest transaction and PE firm’s investment strategy going forward. Excerpts:
Could you tell us what really led to the investment in IIFL?
The big driver for us was the management as we have known them for sometime now. We were very impressed with what they have done. They have a leadership position in the retail brokerage side and have been able to attract team from the likes of CLSA and have launched into institutional brokerage segment. The company also has a leadership position in the insurance brokerage and wealth management space. What is equally importantly is that they are looking to transform themselves into a diversified financial services company. The IIFL management also felt this is an area we could help and add value to their business. That’s the key reason they have invited us to join the company board and support their growth plans. It was a meeting of minds in that sense.
How is Carlyle looking to benefit from this investment?
We like the sector a lot. We have an investment in HDFC and now in India Infoline. This gives us a broad exposure to the Indian consumer. We believe strongly in the overall India growth story and financial services sector is the best way to play. We will continue to deploy capital in the sector.
Are there any specific expectations from IIFL post this investment?
We are fully aligned in terms of their strategy and our role is really to support the management.
IIFL wants to explore international markets and sees the Carlyle association as a key catalyst...
They have entered the Singapore market where we have some presence. They have presence in Sri Lanka where we are not that strong yet. This apart, we will be helping them with their investor base which is largely international. Those are some of the areas where we will be of assistance to the company as far as overseas penetration is concerned.
What would be Carlyle’s investment horizon specifically with private investment in public enterprises (PIPEs)?
Our investment in HDFC was a PIPE and it’s over four years now. So give and take a few years here and there, we will look at a 5-7 year horizon for such investments.
What are your views on the recent development from the Sebi to regulate alternate investment funds?
It is very limiting in nature. Our investors give us money to find good deals. They don’t really care if the companies are listed or unlisted, infrastructure or non-infrastructure, minority or majority and so on. And at different points of time different deals become interesting, like you pointed out that the current market looks good for PIPEs. Similarly, there would be times when private deals would be better so we need that flexibility. And some of the points outlined by Sebi will make things very restrictive for our business.
What are your plans in India?
We are committed to our investment plan in India. We go through phases where we don’t invest at all, like the case has been in last couple of years. The reason being, we thought the framework wasn’t conducive to our investment. But now we do think that things are moving and if the right opportunity comes we will certainly be committed to making investments.