Moneycontrol
HomeNewsBusinessMarketsKKR hunting for opportunities in financials, manufacturing here
Trending Topics

KKR hunting for opportunities in financials, manufacturing here

Speaking to CNBC-TV18, Sanjay Nayar, CEO of KKR India said that manufacturing is the exciting segment now. “With operational ease in India, manufacturing has to remain top priority for us,” he said.

September 12, 2016 / 16:17 IST
Story continues below Advertisement

Your browser doesn't support HTML5 video.

KKR India, the best performing private equity firm, is currently eyeing opportunities in the manufacturing and financial sectors in India. The firm has made some blockbuster exits including from Gland Pharma and Alliance Tyre. Speaking to CNBC-TV18, Sanjay Nayar, CEO of KKR India, said that manufacturing is the exciting segment now. “With operational ease in India, manufacturing has to remain top priority for us,” he said. While some sectors are expensive, one will have to hunt for investment opportunities. His other sector picks include financials and media. There are visible spade of demergers happening now. Indian entrepreneurs are now concerned about the efficient use of their capital and are focusing on return on equity and total shareholders return. A lot of rationalization is happening, he said.Below is the transcript of Sanjay Nayar’s interview to Nisha Poddar on CNBC-TV18.Q: Which are the sectors where you see opportunities arising?A: Manufacturing is still looking exciting and with operational ease in India now, given the government’s concerted focus that we are seeing now translate into operational ease, manufacturing has to remain a top priority for us.Also, we are finding that credit is becoming available, labour is still tough, but some of the ingredients that go into manufacturing is looking quite interesting. We are looking at financial services but we prefer to build platforms. We like media, we like financial services. The rest of it is more to do with a deal per se. If we get a deal that is a buyout opportunity or a significant majority or a big conglomerate is demerging certain units and certain divisions -- and that by the way is increasing in the country -- then we are going to get very focused on that.Q: After your Crompton deal, of course, a lot of consumer electric businesses are trying to demerge, value unlock from their existing parent companies and look at selling prospects. So, in a way, that particular deal was a yardstick, a benchmark for the rest of the industry in terms of valuations.A: We are seeing a spate of demergers now. They are just happening on their own. It is not driven by private equity necessarily, but Indian entrepreneurs are now saying I want to be more efficient about the use of my capital. For the first time, we are finding them say what is my return on economic capital, what is my return to the shareholders, what is total shareholder return and these questions are throwing up very obvious answers, which is why do you have a clutter of businesses, why do you have holding companies with some many operating companies, there is a lot of rationalisation going on. That will throw up a lot of opportunities.Q: Do you think that valuations are running ahead of their fundamentals especially with the way equity markets are right now?A: Some sectors are pretty expensive. I do not think anything is obviously cheap, so you have to go and find those situations to make the investment.Q: You have been fairly confident of the infrastructure space as well. You have some investments in cement.A: We are not a core infrastructure player. That is a separate fund of ours and that has not come in to India. So, matured infrastructure assets will come on the block in a few years and there will be a lot of money available for that. By then the political risk and the economic risk for India will be far lower, you have matured assets and you will have foreign money coming in.For full discussion, watch accompanying videos...

first published: Sep 6, 2016 01:26 pm

Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!