Don't rule out double dip recession in West: Chrys Capital

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Why is First Global negative on metal, oil sector? Nifty may test 5300-5310 if it crosses 5180: Angel Broking Don't see sustainable move above 5200-5300 level: CLSA ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets

Q: The other space which you seem to be quite keen on is the vehicle financing space, you might have sold out of Shriram Transport, but I think you still own Bajaj Auto Finance and Mahindra Finance , is that a space which you continue to back?

A: Yes, we continue to back that. We are also in a third company called Shriram City Union Finance. What we saw for instance is Shriram City Union Finance is very focused on two-wheeler financing, Karnataka and Andhra Pradesh and Tamil Nadu. What we found is the banks pulled out of that space, so there is an opportunity for NBFCs to step in with a lower cost structure and with lower credit loss ratios and be able to address that market space.

Mahindra Finance has been very good auto financier in the rural space. They are widening their portfolio, earlier they were doing UVs and tractors now cars, commercial vehicles, construction equipments, rural mortgages. So we think there is very good growth over a longer-term perspective.

Bajaj Auto Finance has been largely a two-wheeler financier, but now is diversified into other products, loans against property, small business loans etc. So we think that there are few good NBFCs in the country and we have been reasonably bullish, but clearly for NBFCs you have to have a significant differentiator vis-à-vis banks and we believe all three of these organizations have that.

Q: Interesting to see a private equity portfolio with not even a slice of real estate, have you always stirred clear of this space in India?

A: We have the opportunity to put upto 20% of our funds into real estate. So we could have theoretically deployed about 500 million in this space. We were very bearish on real estate back in '06-'07, early '08, made no sense to us. I was public out there and saying these valuations at that time were like internet valuations. We have been looking at real estate, my concern still is that the run up again has been very sharp and so valuations again have become very rich and generally the quality of companies in this sector is poor. There are obviously a few good ones, but in general corporate governance is poor. So whilst we may invest some money in this sector, I think we will take a more cautious approach.