‘Great operating firms help in creating value in long run’

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: Kabir Kewalramani is the founder-director of BH Advisors. It’s the company that manages the India investments of Nicolas Berggruen, the US-based private-equity and hedge-fund billionaire. BH has made nine investments in the country so far in areas such as hotels, real estate, education, car rental and equipment rental services. It is also toying with the idea of getting into the financial services space in the future. Kewalramani, a former investment banker with companies such as JP Morgan, spoke at length to fe’s Viveat Susan Pinto about his plans for India and how the businesses he has backed have performed so far. Excerpts:

Why are you excited about financial services?

More than financial services, I would say it is financing that excites us. There’s a huge potential for debt financing, for instance. But we are not in a haste. We would rather do our groundwork thoroughly before considering getting into that arena.

What is your strategy in India?

We have deployed about $120 million so far. Our investments are in the range of about $10 million to $35 million. We can go up to $100 million, but we are restricting ourselves to about $50 million right now. We are very value-centric as investors. We don’t mind building businesses from scratch. That has been our approach in India. Since ours is proprietary capital, we have the flexibility while making investments. The disadvantage of a fund is that managers have to show tangible returns to their limited partners. This forces exits in a sense if the business is not doing well. I am not saying that we don’t have to show returns. That is there. But the basic difference is that we have a greater room while making investments since ours is a proprietary investment desk. We believe in creating great operating companies. That is how you can create value in the long run. That also implies that you have to stay invested for some time. In India, we have looked at areas that have great potential but haven’t taken off yet like budget hotels, car rental and equipment rental services. These are businesses that have typically done well in the west, but are yet to make their mark here. We started from scratch, setting up the company and getting operations going.