VCCircle

Renuka Ramnath, who went solo to set up her own private equity venture Multiples Alternate Asset Management, has already achieved that part of the business which is under external control: Fund-raising. She announced the first close of the firm’s freshly minted fund at $250 million. “The asset management company will now only grow with every passing day,” a confident Ramnath says. She believes that domestic institutions offer a huge strategic value especially to domestic entrepreneurs. The investment veteran, who has come a long way from heading the country’s largest PE firm, ICICI Venture, to building the foundation of an independent private equity firm to now successfully making the first close at a not-too-modest $250million, said, it has been a delightful journey. In an interaction with VCCircle from Mauritius, she talks about fund raising and the environment and her fund’s investment thesis. Excerpts:-

When did you begin fund raising and what helped you the most in the exercise?
I started out fund raising in early June (2009) and received very strong investor interest at various stages of the fund. Receiving commitments from domestic institutions was a big shot in the arm.

We are targeting a total of $450 million and already have the interest from a lot of institutional investors.  It has been a delightful journey and I have enjoyed every bit of it. A focussed approach and long standing relationships had a ripple effect and helped me in achieving this.

I think you need to present your case with deep and meticulous planning. It has to be detail oriented, where one can clearly see through the investment strategy, past track record, the capabilities of the team, the strategy to carve a niche and the competitive landscape.

Meanwhile, CDC came along and said that they want to look at us and expressed significant confidence in us.

Multiples is also the first Indian fund to raise money from Canada Pension Investment Board. How did you achieve that?
It took us 3-4 months to walk them through our investment strategy, expansion plans, and track record. They are sophisticated deep pocketed investors. We have made the first closing now and expect to make the second close soon.  With every passing day, Multiples will only grow now.

Could you tell us about the fund focus?
About 70%of the fund will be growth minority stakes and the remaining will look at majority stakes or buyout kind of opportunities given our skill set. We want to work with first generation entrepreneurs to provide them with expansion capital for their businesses which we think have disruptive models. Also, we will look at small businesses carving out of large businesses. We have deep experience in running these kinds of businesses.

What is your assessment of the current fund raising environment?
I think there is no dearth of capital. There needs to be proper planning and detailed orientation on how to time the market. The fund size, purpose and goals should be defined. A lot of institutional money and in fact commitments from new institutions is waiting to be deployed. One needs to be consistent in the approach.

Why did you opt for a dual-fund structure?
I wanted to tap both the markets. I am a great believer of the fact that domestic institutions work well from a strategic point of view especially for domestic entrepreneurs and I had to tap the international markets because that is where the real deep-pocketed investors are. We did the dual structure in order to avoid the tax issues.

Did you hire a placement agent?
I had a placement agent for the international component of the fund which I have had for my earlier fund raises also. For the domestic part, we did not have a placement agent.

It is said that the personality-focussed funds often end up being a one-man show. What are your views on this perception?
I have my core team in place. We will do a couple of other hires. I will build the team very slowly and consciously. Every step that I have taken is a deliberate step and I am in no hurry. I don’t have to check all the boxes now. I don’t have to prove myself to anyone as I have built several teams and organizations at various phases of my career.  I have to build an organization of great repute.  I can’t have a very exhaustive team now and be out on fund raising. I want to build a team which is very high growth, and there is a huge opportunity for people to grow within the team.  Team building is something which I can do, but raising money is something which is out of control and we have done that.

It is said that in this challenging environment, LPs are seeking realignment of LP-GP principles and compromises in compensation structures. Did you also face any such challenges?
No, we just didn’t face any such compromises.