Mgmt churn at private equity cos as top honchos jump ship

Written by Shruti Ambavat | Mumbai | Updated: Jul 21 2013, 10:51am hrs
As if lack of exit options and declining returns were not enough, large private equity firms in India are also caught in the middle of management churns. TPG Capital is the latest company to be affected, after 3i Capital and Standard Chartered Private Equity.

Varun Kapur, who looked at growth investments for TPG in India, including Greenko Mauritius and AGS Transact, will not be with the firm anymore, sources in the company said. When contacted, a TPG spokesperson declined to comment. TPG Growth had invested $86 million, along with Bain Capital, in kidswear retailer Lilliput, which was written off after allegations of mismanagement by PE firms last year. Kapur is one of the key partners at TPG Growth, which raised a $2-billion fund last year.

The private equity arm of the London-headquartered Standard Chartered bank has consolidated its PE teams in India, bringing its mid-market team and the main large cap team under one umbrella. Standard Chartered Private Equity currently has an active investment portfolio of more than $1 billion in India.

3i Capital had recently appointed Samir Palod as the India managing director, whereas Anil Ahuja and Girish Baliga had resigned.

All the firms with a two-fund structure can look at a single structure in future because of cost factors and other reasons, said Sanjeev Krishnan, executive director, private equity, PricewaterhouseCoopers (PwC).

In the recent past, the PE industry has become uncompetitive. For a dollar investor, equity value has gone down sharply and as a consequence, people are revisiting their capital allocation decisions. Structural issues still remain in India and the will to fix it cannot be seen, said Rahul Bhasin, managing partner, Baring Private Equity Partners India.

India Equity Partnerss co-founder Gaurav Mathur also quit recently to venture out on his own. Rajesh Jaggi, MD of Peninsula Land, moved to Everstone Capital, a fund management firm, as managing partner of the real estate business. Churn in PE teams will continue if people do not get returns and there will be pressure. The exit pressures and falling value reflect on the industry as a whole, added Bhasin.

Limited partners view on India as an attractive market for private equity investments has dipped sharply in 2012 as against 2011 and 2010, according to Global Private Equity Report 2013 by consulting firm Bain & Company. PE firms have invested $10.2 billion across 551 deals in 2012 in India based on a report by the same firm.

Like other businesses, PE funds are also facing cost pressures, level of scrutiny has also increased. Some bit of rationalisation will happen based on the returns each firm has shown, said Krishnan of PwC.