BackSudhir Valia: The numbers guy in Suzlon-Shanghvi deal
The deal's intricate structure is no surprise given that financial structuring is this businessman's strength
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Mumbai: Sudhir V. Valia was a low-profile local businessman until Norwegian telecommunications company Telenor ASA found a partner in him.
In October 2012, the Norwegian multinational chose Valia, executive director of Lakshdeep Investments and Finance Pvt. Ltd, a family-held investment firm of Sun Pharmaceutical Industries Ltd, to be its partner. At the time, little was known about Valia—except that he was a chartered accountant by training and that he used to be chief financial officer at Sun Pharma.
Mostly, however, the world knew Valia as the brother-in-law of Dilip Shanghvi, managing director of Sun Pharmaceuticals.
“I always wanted to be low profile," says Valia, who is a member of the Institute of Chartered Accountants of India and carries more than three decades of taxation and finance experience.
When Telenor approached Valia for a partnership, he decided to take it up as he understood the rationale of investing in the telecom business at that stage, he says. Just last year, he sold his 26% stake in the venture to Telenor for an undisclosed amount.
Valia has now hit the headlines again after Suzlon Energy Ltd, the world’s fifth largest wind turbine manufacturer, signed a definitive agreement with Dilip Shanghvi Family and Associates (DSA) last week for an equity investment of ₹ 1,800 crore.
Suzlon Energy, promoted by Tulsi Tanti, was scouting for a financial investor to help the company cut debt and expand the business.
The Shanghvi family and Valia emerged as white knights for Suzlon, with Valia taking on the task to structure the deal.
“Tulsibhai (Tulsi Tanti) was looking for financial investors. Through our common relationship, we got to know about this. We believe Tulsibhai has genuine capabilities. We have no intention to run the business. We will stay as investors," Valia said.
Post allotment, DSA shareholders will hold 23% equity (based on current shareholding), while the Tanti Family will hold 24% shares. Management control of Suzlon Energy remains with the Tanti Family by virtue of a pooling arrangement for voting.
Under the structured deal, Suzlon will get capital, working capital and funds to start new businesses.
DSA and Suzlon will form an equal joint venture for the wind farm development business with an investment of ₹ 450 crore each.
DSA will also help provide a project-specific non-fund based working capital facility to Suzlon, and DSA will also provide credit enhancement to the lenders of Suzlon for additional project-specific working capital facilities.
The intricate structuring of the deal is no surprise, given that financial structuring is Valia’s core strength.
He has a patent registered in 1995 on financial structuring. “Financial structuring is what I understand very well," said Valia, who has structured at least 20 merger and acquisition deals for Sun Pharma without external support. But his ambitions have gone well beyond structuring deals.
In 2002, he floated a real estate company, Suraksha Realty Ltd. Though day-to-day operations are handled by a separate management team, Valia keeps a close eye on the financial and strategic decisions of the business.
Valia has other investments too, including in a 2,600 megawatt power project in Andhra Pradesh.
“At present, it is a non-starter owing to non-linkage of coal. Practically, we have secured almost all necessary approvals. It will start operations after getting coal," he said.
Valia is also in the process of setting up a large financial institution.
In 2014, Valia, along with a few other individual investors, acquired a majority stake Fortune Financial Services India Ltd from J.T. Poonja and Nimish Shah.
Valia is currently in the process of rebranding the organization and inducting talent into the business.
In February, Valia also agreed to buy at least 50% stake in Pay Point India Network Pvt. Ltd, a Mumbai-based payments firm, if it receives a payments bank licence from the Reserve Bank of India (RBI).
“There is always scope for improvement in stake once we sit with other shareholders," Valia said. Apart from offering banking and financial services, Pay Point India allows its customers to purchase or make payments for almost any fast-moving consumer service, like utilities, travel, cinema and mobile recharges. The company presently has 12,000 touch points and accepts payments for up to 60 vendors.
Valia said Pay Point India also possesses an RBI licence to issue pre-paid payment instruments (PPIs), which it acquired around 18 months ago.
Interestingly, Valia and Shanghvi are both in the fray for a payments bank licence, as the Sun Pharma managing director has also applied for a similar licence through a separate application. However, Valia said there is no connection between Shanghvi’s application and his plans. Both Shanghvi and Valia stepped down from key positions at Sun Pharma some years ago.
In May 2012, Shanghvi, founder of Sun Pharma, relinquished his job as chairman of the board of directors to make way for Israel Makov, former chief executive of Teva Pharmaceutical Industries Ltd.
Valia also stepped down as chief financial officer in 2012 but remains a director.
“I was looking at all daily functions excluding formulation sales and research and development at Sun Pharmaceutical. It was a conscious decision to step down from chief financial officer position. We (Valia and Shanghvi) wanted the company to run on autopilot," Valia said.
He has been a director of Sun Pharma since its inception and is also on the board of Taro Pharmaceutical Industries Ltd.
What is the source of funding for the many ventures that Valia has an interest in? Valia said he and family firms have holdings in Sun Pharma and other firms wherein they get dividend that needs to be properly channelized.
“We need to park these funds at right investment opportunities," Valia said.
Despite his success, Valia operates out of a nondescript office in Dadar, near Mumbai, said a person close to him.
“He is a man of few words," he added, requesting anonymity.
Another person who knows Valia closely said he is a smart investor who selectively picks his investment opportunities. “He not only picks right investments, but also structures it in the finest way. However, he wishes to stay low profile," the person said, requesting anonymity.
After financial services, real estate, power, renewable energy and banking, what next? Valia, who loves adventure sports, skips the question with a laugh.
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