PE firms target non-financial sectors to recruit top brass

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Mumbai: In a departure from a long-standing trend, private equity firms are zeroing in on industries like manufacturing and services in their hunt for chief executive officers (CEOs), managing directors and other senior executives, thus deviating from the traditional practice of searching from within the financial sector.

PE firms are now keen to entrust their operations in the hands of professionals from different industries, such as those from FMCG giants Hindustan Unilever or Coca-Cola.

For instance, TVS Capital, the PE arm of TVS Group, has hired D Sundaram, an industry veteran who served HUL for 34 years, as its vice-chairman and managing director. Future Capital Private Equity has appointed Jaspal Singh Sabharwal, who was with Coca-Cola India as vice-president, franchise operations, as its MD. Sabharwal has 20 years of corporate experience.

Anjali Bansal, who heads India operations of SpencerStuart, a global executive search and leadership-consulting firm that has done several search assignments for PE firms in India, said: “In yesteryears, people with investment or financial profiles were hired, while there is now a focus on people with operational skills. The main reason is to help portfolio companies in their business operations.” According to her, as the PE industry in India is attaining maturity, new appointments of operating professionals assume more significance for the firms.

Another example is the appointment of Richard B Saldanha as an executive director at Blackstone PE. He has had a record of accomplishment of 30 years at Unilever with the last being the chairman, Unilever Peru. Rajiv Sabharwal, an executive director with Sequoia Capital India, has working experience with Godrej & Boyce in the consumer marketing area.

Vikram Utamsingh, ED and head of PE at KPMG, said: “PE firms have increasingly realised the necessity of playing a bigger role to improve the performance of portfolio companies which were affected badly due to the global recession. They had to reduce the amount of working capital by closely monitoring the performance. Hiring veterans with strong operating background remains the best solution to tackle the situation.” Also, the actions of these hired professionals bring credibility to promoters, he added.