Mr. Srinath Srinivasan’s Insights On Current Market Trends In The World Of Fund Management
What are the most critical levers of success for Oman India Joint Investment Fund Management Company Pvt Ltd ?
Oman India Joint Investment Fund Management Company Pvt Ltd (“OIJIF MC”) is a professionally managed private equity fund manager with AUM of USD 330 m. OIJIF is backed by prestigious investors including sovereign wealth funds and financial institutions. In our line of work, it is critical to build a portfolio which delivers attractive risk adjusted returns to our investors. The factors that contribute to the success of our brand are:
Patient capital: Our LPs and the investment team both emphasize our brand as a provider of patient capital. This helps us to make inroads into industry-leading businesses that require growth capital to build their business over medium to long term. We look to collaborate with our investee companies towards long-term value-creation initiatives with horizons extending beyond our investment period.
Versatile strategy: We follow a versatile, opportunistic approach to investing through diverse strategies to maximize returns for our investors. For example, taking cognizance of recent industry trends, we have built a thesis and completed investments in a few exciting new-age, tech-enabled businesses.
Research-driven investment theses: Our versatility is supported by continuous research initiatives across industries. We identify sectors of interest on a regular basis, thoroughly map out every aspect of competitive dynamics and look to build investment theses for each segment. We then go about building relationships across segments of interest so that we can respond in real-time to emerging investment opportunities.
Category leading businesses: We have consciously focused on building a portfolio of category-leading companies in various sectors and regions. These companies are well positioned businesses which have the capacity to absorb systemic shocks.
Digitally enabled tech-savvy businesses: Over the last few years we have paid incredible attention to changing customer habits and behaviors, including how tech savvy businesses and consumers are becoming. We have encouraged our portfolio companies to focus on development of new technology as well as become digitally enabled, including through adopting cloud and mobile tech initiatives.
Experienced team: We are a team of 10+ investment professionals with 120+ years of full-cycle investing experience. The leadership team brings experience of investing across geographies and strategies at marquee institutions. The team has a demonstrated track record of creating and harvesting value across sectors and vintages.
Ethical practices: We have a reputation for fair-dealing, transparency, strict compliance to fiduciary duties to investors as well as to a duty of care to our investee companies. Our reputation helps us make inroads into some of the most prestigious business houses, limited partners and transaction advisors.
Working collaboratively: We work closely with our investee companies as business partners in value-creation initiatives with full collaboration and ownership of results. We bring to the fore the deep and diverse expertise within our team to every transaction. We also leverage the power of our wide networks to source best-fit industry leaders and advisors to drive specific goals across the investment lifecycle.
What are key industry trends to keep an eye out for over the next few years?
The Indian alternative investments industry has growth by leaps and bounds. Last year we witnessed over 1,200 deals worth over USD 75 bn, nearly 3x the value of deals closed in 2017.
We now have a deep market for seed-stage, growth, pre-IPO and buyout investments. There is excitement for new-age businesses alongside continued traction for lucrative traditional businesses. In short, the Indian alternative investments industry is maturing well – it is becoming deeper, increasingly segmented and more specialized.
Some overarching trends which will define the industry going forward and underpin our investment strategy:
- Consumer behavior is changing, with many customers pursuing a digital-first approach in many categories. D2C businesses will remain sought-after, subject to proving their salience in a crowded market. New use cases of consumer tech in services (health-tech, wealth-tech etc.) are gaining prominence.
- Disruptors of traditional value chains are enjoying rapid uptake from small businesses which have long suffered at the hands of inefficient supply chains. E-commerce based B2B businesses will remain prime property, subject to them serving large addressable markets with sustainable unit economics.
- Scaled businesses with economic moats in the form of brands, technology or distribution will gain from the secular shift towards organized players. Succession planning and aspirations to mature as institutions will compel promoters to look at PE funds as long-term partners in creating value.
- Beyond just ESG compliance, ability to drive the ESG agenda will motivate investment decisions. For example, the entire EV ecosystem will present many compelling investment opportunities.
- Penetration of organized BFSI channels will rise driven by a growing formal economy, greater digital adoption, increased awareness of financial products and competitive advantage of organized players amongst other factors. BFSI will remain an important PE investment theme in India for multiple fund vintages to come.
As a mid-market PE fund, we are geared to build our portfolio around the above themes:
- We are invested in two high-growth, new age businesses (Homelane and ShopKirana), both serving large addressable markets with best-in-class unit economics.
- We are firm believers in backing businesses with unique intellectual property, having backed solid consumer brands (Stanley, Crompton Greaves, Senco Gold) and businesses with strong technical capabilities (Divgi TTS – India’s largest EV transmission manufacturer, Strides Pharma –focused on niche pharma products and developing a high-value biotech business).
- We also believe that BFSI will remain amongst the largest, long-term investment themes in India and have done multiple deals across the vertical (PNB Metlife, Annapurna Finance, Capital Small Finance Bank, DCB Bank).