Mumbai: Apollo Global Management Llc, the world’s sixth largest private equity (PE) fund by assets under management, may have been slower than its peers in entering India, but it plans to step up its presence in the country over the next year.
“We would like to deploy a lot of smart money in India and could easily invest up to $1 billion (Rs 4,590 crore) over the next 12 months, if the environment and the opportunities are right,” Mintoo Bhandari, managing director, AGM India Advisors Pvt. Ltd, the adviser to Apollo’s global funds, said in an interview.
So far, Apollo has made only two investments in India—a $100 million investment in Dish TV India Ltd in 2009 and $350 million in Welspun Group in August this year.
Apollo is now looking to invest in diverse sectors in India such as real estate, metals, auto components, media, oil and gas, and other natural resources.
Of its 15 investment professionals in India currently, three are focused on real estate. Apollo acquired Citi Property Investors, the real estate investment division of Citigroup Inc., in November 2010, resulting in the acquisition of real estate assets in India. “These assets are in both residential and commercial (segments). We will look to invest more aggressively in real estate in India going forward,” said Bhandari.
Apollo is a value investor “and in India that means having a contrarian view”, according to Bhandari. “Value usually translates into getting a good price, which is not something that is easy to do in the hyper-growth environment of India,” said Bhandari. “So we generally are open to pursuing sectors and opportunities that some of our competitors may be running away from—we like to get compensated in valuation for accepting and tackling complexity.”
Apollo had total assets under management of nearly $72 billion as on 30 June.
Apollo’s peers, including TPG Capital LP, Carlyle Group, Blackstone Group LP and Kohlberg Kravis Roberts and Co. (KKR), have been investing aggressively in India over the past five years.
Explaining the reason for Apollo’s late entry, Bhandari said, “We have been methodical, cautious and deliberate in our approach in adopting the strategy of Apollo to India. Perhaps we have been too cautious, but regardless, the result is that we haven’t done as much as many other firms. We have done only things that play to our strengths and to which we can add a lot of value.”
Apollo also hasn’t made major investments in the other Bric (Brazil, Russia, India, China) countries, but wants a bigger footprint in these markets now. “For example, many competitors have been very active in China for over a decade, but Apollo is only now considering making a meaningful move into China and the other Bric markets,” said Bhandari.
Vikram Utamsingh, executive director and head of private equity at KPMG India Pvt. Ltd, said, “These funds are increasing their exposure to the emerging market as their investors are clearly asking them whether they have exposure to India and China, because they want to see some returns which the US market hasn’t been able to provide.”
The top 10 PE firms have increased their investment in Asia significantly over the past three years, at the expense of North America-focused investment, according to a report by Preqin Ltd, a London-based research firm. Asia accounted for 23% of the deals completed till in the year to May 2011, up from 5% in 2006-2007.
India represented 9% of the value of all investments by the top 10 global PE firms this year. Historically, India’s representation has been 1-2% annually.
Apollo plans to look beyond PE in India and will also invest in debt.
It isn’t the only listed buyout firm diversifying in India. KKR has set up a non-banking financial company (NBFC) in India to lend money to corporate firms.
“The idea behind setting up the NBFC business was if we only do PE, then there are not going to be enough deals,” said Sanjay Nayar, KKR India’s chief executive and country head, in an interview to Mint last month. “The long-term plan is to build an asset management company, of which the NBFC will just be a part, and over a period of time we could even set up a mezzanine fund.”
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