Advent has appetite for more financial service investments in India, says global chairman

Edited excerpts:

Mussafer: We have been here in India now for a decade, we are about to celebrate with our team, and over that time period we have been working to really deepen our relationships and our expertise. And of late we have really found some traction in some amazing new investments that are really spot-on in terms of our focus destinations.

But specifically, what we are really seeing, obviously the growth is the first and foremost. India has one of the fastest and largest GDP growth of any large industrialised economy. On top of that, with the reforms that have happened of late, we find increasingly attractive investment opportunities across a few different sectors.

Brocklebank: As Mussafer said, I still think growth is exceptionally interesting for us, the GDP growth. The other thing is you are seeing more developed exit market so you have more secondary buyout opportunities; so for us that is good. The third is you are seeing more Advent type deals, the type of deals we particularly like - control buyout but also minority positions where we have often a degree of governance influence as well. So for all those reasons despite the macro, we think it is an extremely interesting place to invest in.

Jalan: What we really liked was that it is a fairly unique asset. It is not our classic, either domestic formulation or US generics business. It is fairly specialty pharma asset with both critical care and women’s health, which are far higher growth areas within the pharma industry today than the overall industry.

Mussafer: In particular, what we found are ways to more effectively grow this businesses, both from the development and focus with the pipeline of new drugs as well as finding synergistic add-on acquisitions. I expect we may have an opportunity for both of those type of things with our investment here. But it gives us a foothold in an amazing market, it also gives us access to tremendous amount of R&D talent.

Brocklebank: Yes indeed. The timing is interesting for sure right now, given what is going on and I think our investment in Aditya Birla Capital is a good example of our interest in doing this type of deal. We think there is a very interesting opportunity there and we will continue to do that. In fact, we have got more than one financial services investment here in India right now.

Jalan: We would do things like Aditya Birla which is facing some pressure in terms of the price of the stock at this point of time whereas the underlying fundamentals story of that company is very strong. They don’t have any major issues in their lending book, their insurance business is really off to a nice start with new tie-ups that they have. Their asset management business again is market leading, among top 3-4 firms in the country right in that space. So we would look for those kind of opportunities I would say as opposed to heavily distressed kind of deals, which is really as I have always said, not our expertise.

Jalan: As against the underlying theme of many of the companies that we are invested in is really the consumption growth in India and I continue to believe that the long-term story holds. The thing that we are telling our portfolio companies today is let us see how we can use this crisis, this opportunity to, one - enhance our market share through organic growth opportunities and two - more importantly, can we use this time to buy companies for our portfolio companies because there are many smaller companies which are now coming under distress and even if not under distress, they are not able to scale it up.

So we are using this time judiciously I would say to help our companies scale better and faster, when the smaller companies probably will be under more pressure given that many of our businesses are market leading.

Jalan: Crompton yes, we have made very good progress but we do feel there is some good imminent opportunities the company is working on which will further propel the growth of the company from where it has, and like you rightly said, it has done well but I think there are many other innovations that they are capitalising on. So we want to see all that play out.