George Thomas, one of the partners at the home-grown private equity major India Value Fund Advisors (IVFA), is all set to launch his own PE fund. The new venture will target a corpus of $250 million. Thomas, who has been with IVFA as a partner since 2002 based out of its Bengaluru office, is currently in the process of putting together a team, and is expected to be on road for fund-raising by end of the year.
Thomas told VCCircle that he is transitioning out amicably and that he will continue to sit on the boards of a few portfolio companies and advise them. According to Thomas, IVFA is even helping him in his new venture.
IVFA is one of the leading PE funds in the country with $1.3 billion in assets under management. The firm is currently making commitments out of its fourth fund worth $725 million, which is one of the largest funds raised in recent times. The firm has seven partners including Managing Partner Vishal Nevatia, and partners Mahesh Krishnamurthy, Vikram Nirula, Sanjay Arte, Pramod Kabra and Sunil Theckath, besides Thomas.
The firm often targets majority stakes and opts for deals where the fund can own more than 51 per cent of the company. The current portfolio of the fund has a predominant bias towards controlled transactions, with some growth equity deals. Over the years, IVFA’s unique positioning of buyout transactions evolved from small companies which have a turnover of Rs 50 crore to large-size transactions worth Rs 100 crore.
This is where Thomas finds an opportunity. He feels that his skill set is better suited for small-ticket transactions where he can add “significant value to an enterprise". So, Thomas is not keen to model his franchise as a miniature IVFA. “The plan going forward is to raise a sector agnostic fund, with an average target ticket size of investment of $10-20 million. The fund will seek to take control in selective instances where majority ownership can translate into superior exits. Most of the control transactions will be originated on a proprietary basis. The composition of the team will reflect the orientation of the fund towards deeper operational engagement with investee companies and a bias for proprietary origination,” he said.
Thomas had been involved in the operational aspects of IVFA's investments in grocery retailing, healthcare insurance, media and transportation services industries. Thomas had two early turnaround assignments to his credit – that of Trinethra Retail, a grocery retail chain in Andhra Pradesh, and TTK Healthcare, a licensed third-party healthcare administrator (TPA) based in Bengaluru.
At Trinethra, the investment management firm re-vamped the process and systems, launched new product categories (fruits and vegetables), explored new formats (hypermarkets) and eventually sold the business to Aditya Birla Retail in December 2006, which proved to be a multi-bagger exit for India Value Fund. Again with the IVFA, TTK had grown substantially and expanded its presence to seven new locations. In February, 2007, it sold its business to Swiss Re, a global leader in re-insurance. Apart from Trinethra and TTK, Thomas was also involved in the fund’s investment in Radio City and V-Link (Meru Cabs).
Thomas was also part of the team which conceptualised a separate vehicle for IVFA's clean energy practice, Akshayini Oorja, and India Finserve Advisors (IFA), a vehicle to build a portfolio of businesses focused on providing financial services to the bottom of the pyramid. However, the two investments under the IFA - Disha Microfin and Future Financial Services - did not perform as expected, post the Andhra microfinance debacle.
Thomas’s exit comes at a time when a lot of PE fund managers have re-branched to set up their own shops. Ajay Relan of Citigroup Venture Capital, Renuka Ramnath from ICICI Venture, Subbu Subramaniam from Barings Private Equity Partners and Rajesh Khanna of Warburg Pincus left large institutional platforms to start their own firms in partnership with other fund managers who are commonly known as general partners.
According to Thomas, this is indicative of an industry which is maturing. “There are a lot of niches in the market which may not necessarily be filled only by big firms,” he says confidently. However, fund raising is not easy for first time managers as LPs are becoming increasingly discerning in terms of track record, the team and strategy.
Thomas is a post graduate in humanities from Delhi's St Stephens College. He has been in various corporate roles such as director and chief operating officer of BPL Soft Energy Systems, director of Warner Lambert India’s confectionery business, and has also had a stint in the foods businesses of Hindustan Lever and Unilever, UK.