Christmas celebrations were in full swing at Avendus’ office in suburban Mumbai. And as the year comes to an end, Chief Executive of Avendus PE Investment Advisors Manoj Thakur, talks to Business Line about why he is bullish about 2013 and the opportunities that lie ahead for the PIPE (Private Investment in Public Equity) fund category in India. He also talks about Avendus’ third fund and some regulatory introductions that can boost PIPE investments in the country.

With the uncertainty in the markets, isn’t it risky to make investments?

Risk or unpredictability in the market has increased. However, on a particular company opportunity still exists. If a company operates in a particular theme, for example urban, rural consumption, then there are certain special opportunities. Timing decisions is not our style. We are fundamentally different in a sense.

We do a huge amount of primary research — we talk to distributors, competitors and do reference checks on entrepreneurs. The strategy on primary research has actually worked in our favour. Out of 3,000 small- and mid-cap companies, only 200 are over a billion dollars. Our favoured market-cap would in the range of Rs 1,000 crore.

How do you pick companies to invest into?

We also do several rounds of meetings with the promoters and at different levels to formulate our investment hypothesis. You can see that our strategy is very different.

We rank promoters in three categories — skills and competency levels, hunger quotient and ethics levels.

We look to invest in mid-cap companies which are market leaders in the business. We don’t go on boards of investee companies, instead we suggest people.

Tell us something about the third fund that you are planning?

At present, we have two funds. The first fund (September 2009) has been fully invested in seven companies. We started the second fund in January 2011. About 90 per cent is deployed and we should be able to make one more investment in a month’s time. A typical investment is in the region of Rs 20 crore.

We’re looking at launching our third fund soon. The money is being raised from domestic investors. We are still in the planning stage and the fund will be much bigger. The size of this fund will be significantly higher — it should be double the size of these funds.

> priya.s@thehindu.co.in

Related Topics