We are evaluating opportunities in the NBFC space: Sanjay Kukreja, partner and CIO, ChrysCapital

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Published: July 17, 2019 4:06:48 AM

The company has outperformed quite significantly. It isn’t a domestic company. It is an export-oriented firm that serves the US healthcare market providing services like revenue cycle management, auditing, accounting etc.

Sanjay Kukreja, partner, CIO, ChrysCapital, Exide, industry news, ChrysCapital india, ChrysCapital news, Livguard, GeBBS Healthcare Solution, ChrysCapital GeBBSSanjay Kukreja, partner and CIO, ChrysCapital

Private equity firm ChrysCapital, which has approximately $4 billion of assets under management, is set to commence deployment from its eighth fund in future. Sanjay Kukreja, Partner and CIO at ChrysCapital tells FE’s Bhavik Nair in an interview that the firm is evaluating opportunities in the NBFC space. Excerpts:

You recently invested in Livguard, a firm that manufactures batteries. How do you view that sector and the competition here?
I think battery space is quite interesting. That business makes an interesting return on equity. The leader, Exide, obviously has generated a good RoE for a very long period of time. Amara Raja has also done well. There have been lots of players who have tried to come in and attempt to take the number three slot. But it is difficult, because it requires brand and distribution. I think in Livguard, we see the ability to stake a claim at not a distant third but a real third position and then challenge the number 1 and 2 as well over time.

Last year, you bought GeBBS Healthcare Solutions. How is the investment panning out?
Very well. The company has outperformed quite significantly. It isn’t a domestic company. It is an export-oriented firm that serves the US healthcare market providing services like revenue cycle management, auditing, accounting etc. Because there is so much inefficiency in the healthcare provider and the payer side, there is a big room for this kind of service. Outsourcing is also limited in this area. This is a company which is one of the leaders in that space. In FY19, the company has grown north of 35% organically. Margin expansion has also been good. The margins are north of 25%.

Could you give us a picture on your latest fund? How much of it has been deployed?
Our eighth fund is a $900 million-fund. We haven’t started deploying out of the fund yet. We are getting to a point where we cannot put another new investment into our seventh fund. We will open the next investment as it comes through into the eighth fund which will be the first investment from that fund.

Talking about the NBFC space, do you see any opportunities there?
We do. It has been a staple business for us. We had investments in Shriram Transport to begin with, and also in Bajaj Finance and Mahindra Finance as well. All these are exited investments. More recently we have been with Hero Fincorp. Other than that, new opportunities are also turning out. We have also invested in Varthana, which is an education finance company. It is a very focussed business around education loans to schools. They have developed deep underwriting capabilities to address that segment. These are the existing portfolio companies. We are also evaluating other situations, again niche companies which can navigate the cycle well.

How do you see opportunities in the listed space?
I think the markets are still expensive and they are very bipolar. What has happened is that large cap companies and those that are showing decent growth and RoE have been priced completely to perfection. You have liquidity really driving the market, systematic investment plans (SIP) inflows are well over Rs 8,000 crore now every month. Mutual Funds are flush with liquidity. The same existing ideas keep getting all the money. Small caps and mid caps are actually getting ignored. There is some inefficiency there and I think there is going to be some value in the mid-cap segment but not across the board. Certain sectors like infrastructure and real estate have been completely decimated from a market cap perspective. It might make sense from a trading point of view for some people to come in but it is not for folks like us who are eyeing secular returns over 5-7 years. We don’t see ourselves running after those kind of opportunities.

What would be your strategy going forward?
From a pace of deployment point of view, you will probably see four to five investments over the next twelve months.

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