Don't believe mkts will take highs in 2010: Parag Saxena

Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

Q: Was it tempting for people like you who are not really in secondary equity markets but really venture capitalists and the capitalists and private equity players; was it tempting in March of this year to getting into the equity market where you had perhaps more mouthwatering values there?

A: There were certainly some very attractive values in companies that we know. I think there are two important issues. In many companies liquidity is modest particularly for a fund the size of ours where to make an impact we need to have atleast USD 50 million in a position. It is hard to get that into a single equity. But that was good pricing.

The other issue - and here you start to differentiate between what your specific interest is - is that limited partners which is what we call our customers don't like to pay our high fees for buying secondary equity positions. So we have to be thoughtful about what we do.

Q: You've got about ten investments in India. Were most of them made in the last year when the price has got more reasonable?

A: We made more of them in the reasonable price phase. In aggregate we haven't made that many investments although we have made ten investments, we are less than one-third invested in our fund. Typically, the cycle of a private equity fund is that you take four and a half years to get invested which means every year you should be about 25% or so invested in a four year cycle.

We are about that and it is two and a half years. So we have held back but we are very eager to invest. The challenge today is to find deals that are attractive to us in companies that are attractive.

Q: Do you look at sectors or will you just look at companies or is it a particular company or a particular sector?

A: We are very broad. Our simple thesis is that the background that we are investing in is that the Indian consumer, the Indian individual's gross domestic product (GDP) per capita is going to keep rising and we just have to find the right time and price. We cannot perfectly time these things. So we are sector agnostic.

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