In his pink shirt and blue jeans, Guru Ramakrishnan, the long-haired 41-year-old chief executive of Old Lane LP, doesn’t look like the chief executive of a hedge fund. But that isn’t the only unusual thing about the man who is in India a little over a month after his firm was acquired by Citigroup.
Ramakrishnan is investing his firm’s $500 million (Rs2,050 crore) India fund in a somewhat unusual mix of private equity and other investments, and at a pace that makes most other fund managers look stodgy. By next month, around 40% of the India fund which closed late last year will be invested (or committed, in fund manager lingo).
The rest of the fund will be committed over the next two years and could probably be invested in opportunities Old Lane is evaluating in special economic zones (SEZs), ultra-mega power projects, health care and finance. Old Lane, which gets in to projects early and works with the management through the development stage of the business has thus far invested in coal-based power generation, real estate (an IT park with two-million sq. ft of office space in Chennai, where Ramakrishnan was born and brought up), and infrastructure projects across India.
Moving fast: Guru Ramakrishnan, CEO, Old Lane LP.
The New York-based Old Lane, which was set up by former Morgan Stanley executives Vikram Pandit, John Havens and Ramakrishnan, was bought by Citigroup last month. US media reports said the 13-month-old hedge fund had been bought for $800 million. Pandit now heads Citi’s alternative investment business, while Ramkarishnan, a co-founder, has taken over as the CEO.
“Our business is really two businesses,” said Ramakrishnan, describing how the international business works like a hedge fund, investing in fixed incomes, currency, commodities and equities markets in America, Europe and Asia, and the India business makes private equity investments. “We do think SEZs provide an interesting option,” he said. “But we look at opportunities as episodic and on an individual basis.”
The policy flip-flop on SEZs does not worry Ramakrishnan, who said his company was looking at investing for the longer term. “Our investors, foundations and endowments and some large pension funds have investing horizons of seven to 20 years. We have very little money from fund of funds or high net-worth individuals,” he added.
Although the Noida toll bridge is the only listed transport infrastructure project in India, Ramakrishnan said exit opportunities for investments in infrastructure could come from listing or from other longer-term investors wanting to buy in.
Old Lane’s real-estate project will be completed later this year and the guidelines for the company’s India fund say that around 25% of its investments could be in real estate (and that 50% could be in infrastructure). India’s real-estate market, where prices sky rocketed partly because of the entry of international (real-estate) funds, is now plagued by concerns related to overheating, which the Reserve Bank is trying to cool down.
“We are always looking out for bubbles and are concerned about how they will be resolved. But the policy cue you get from RBI is that they are trying to do it systematically, over a period of time,” said Ramakrishnan, adding that over time, Old Lane would not just look to invest in infrastructure projects or companies but actually bid for them.