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Michael Liu, Senior Vice President, Portfolio Advisors

We may deploy over $40M for primary investments over two years: Michael Liu

08 March, 2016

Global limited partner Portfolio Advisors LLC has a decade-old relationship with India. The firm currently has $13 billion in assets under management and has backed some marquee names like ChrysCapital, India Value Fund Advisors, Actis Private Equity and Baring India. To date, the firm has invested less than $80 million in the country but expects to ramp up its investment activity going forward. Senior vice president Michael Liu, who will be a speaker at VCCircle’s flagship VCCircle India Limited Partners Summit 2016—which will be conducted on March 9 and 10 at Taj Lands End, Mumbai—talks about the rise of secondary deal opportunities in the country. Edited excerpts:

You have a decade-long relationship with India. What changes have you noticed after the current government took over in terms of ease of doing business?

We wish the changes have been even quicker than what we are seeing. There was a lot of optimism when the new government came into power but the reality is that even today I see hurdles. There is no clarity on GST reforms. The amount of reforms being implemented is only a fraction of what we expected. Having said that, we do see a marked improvement in the efficiency of the government in renewing licences, etc. Looking at the current environment, we do have some concerns and hopefully they will be resolved.

How do you view India in comparison with other BRIC nations?

Rupee is in a better shape than (the currencies of) some other emerging market economies. We are hoping for a more stable environment for the currency. India is in a much better position than before. India and China have always been our two main markets—both represent different kinds of economies. We have always been active in both the countries. China has, because of its political system, its own merits and risks. India has always been a more 

entrepreneurial-promoter-driven environment. We see GPs with significant experience in the international market, good execution, best global practices and strategy. China is comparatively less interlinked with the international market because of its culture and language. China has a big domestic market but today, I see a lot more room for Indian consumer market to grow and hopefully catch up with China.

Post the Lehman Brothers-crisis in 2008, how has your relationship with GPs changed in India?

One big change is the secondary deals that we do. Pre-Lehman crisis era was a more primary market dominated deals period but now there is a lot more deal flow on the secondary side. LPs are now having second thoughts on India or having their own strategy. You see a lot more action on the secondary side not just for India but the entire Asia. In India, secondary funds have been a significant pile of our deal flow activity. We also see more changes in private equity teams which is not healthy for the industry. But post 2008, the environment has been a lot more conducive for 

long-term business. We now look for GPs who have been together for a long time and have gone through difficult times together. Another big change I see post the crisis is the rise of VC funds. India is, however, not a big focus for our venture strategy right now.

When you talk to your GPs in India, where do you see major challenges?

A lot of GPs who have raised capital in the past may not be able to raise (capital) right now. They are now trying to strengthen the team with experienced professionals. The requirement to work with entrepreneurs is also more prevalent today. Earlier, people with finance background raised funds easily but now PE funds are seeking people from operational background.

What is your outlook for India in 2016?

This is a very important year for us as we can see end of fund life for our earlier investments and expect good returns. We expect to see more capital to come back from India. We continue to look at investments in two-three funds over the next 18 months. I believe we will be more active than last year on the secondary side in India. We are looking to deploy $30-40 million for primary investments over two years. On the secondary side we will be more opportunistic.


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We may deploy over $40M for primary investments over two years: Michael Liu

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