A large investor will certainly boost your growth curve, but are you ready to be grilled? The head of one of India's leading private equity fund takes you through the kind of questions you should expect.  

She is credited with raising the India Advantage Fund, one of India's largest private equity fund with a corpus of $230mn. But her business acumen is better understood through her early investments…. Kishore Biyani's Pantaloon Retail, Ajay Bijli's PVR Cinemas and R Subramaniam's Subhiksha.

Today these businessmen regard her as a close personal friend. She was recently nominated for The Economic Times,' Businesswoman of the year award'. Who is she?

Meet Renuka Ramnath, Managing Director & CEO, ICICI Venture. She began her career with ICICI in 1986 in the merchant banking division of ICICI. In 1999 she took a three month sabbatical and did an advanced management program at Harvard Business School. This was a turning point and the course changed her worldview.

"At Harvard I realized that great companies like Coke, Starbucks or Nike had their moments of imminent death at some point. They survived through their ability to hold on, explore new markets and by strengthening the company with new people," said Ramnath to The Economic Times.

Coming back to India, she first started ICICI Eco-net an incubation fund for technology companies. In February 2001, ICICI Eco-net was merged with ICICI Venture and Ramnath took over as Managing Director & CEO of ICICI Venture.

In this exclusive with The Smart Manager, she talks about how private equity boosts entrepreneurship.

From being a passive investor, you are now increasingly participating in management buyouts? Why? Is it because you need more control over your investment?

I would like to answer this in a slightly different manner. Firstly we are engaging in management buyouts because we believe that this an emerging market opportunity in India. Secondly, our brand identity lends itself well for such activities.

ICICI connotes a lot of positive images and helps enormously in creating a niche position in this emerging opportunity. And thirdly and most importantly, it is has made us far more empathetic of entrepreneurs. We are no longer ‘a private equity company who just sit and ask questions’. In the companies that we control we are the question and we are the answer. The buyouts have made us understand the hardships involved in starting an enterprise, managing it efficiently and then setting it on the growth path.

Today I think like an entrepreneur and value the shares of our companies more dearly. Why should I sell my company at X value when I know that it is worth 11/2 times more than the market valuation, is the language I speak. But five years ago when we were not into management, if an entrepreneur told me that his company's shares were worth more than the current market price I would laugh at him.

But today I am able discern between somebody who actually believes it and somebody who just says it for an ego trip. Above all, having control puts you in a situation, which is completely incomparable with a non-controlling situation.

Management buyouts have also indirectly helped us in other ways. For example, when the companies we own perform well, other entrepreneurs take our advice more seriously. We are able to back our advice by experience, ‘In our company this is what happened, these are the problems that we went through and this how we solved it.'

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