Transcript

How Private Equity Fuels India’s Next Growth Wave

Akshara: Hi everyone, this is Akshara Menon from PMS Bazaar. Welcome to another Fund Manager Interview Series, where we sit down with fund managers and market experts to really understand and break down what's happening in the world of investing. 

Today, we're going to talk about something more interesting which has got a lot of attention in the market, which is Private Equity. Let's take a closer look at how the mid-market opportunity is growing and how deal-making is happening. 

To talk about that, we have an expert for the day, Mr. Vinit Rai, Managing Director, Private Equity. Vinit has been with JM Financial since November 2006 and brings over 20 years of overall experience, including more than 16 years in investment across India. As a founding member of the core investment team at JM Financial Private Equity, he has played a pivotal role in driving the firm's early and growth-stage investments and executing several successful exits. Welcome to the show, sir.

Vinit Rai: Thank you for having me. Thank you.

Akshara: And let me start by putting up a question. You have been in the industry for two decades now, so you have seen multiple cycles as well. So, what is pulling you  into private equity?

Vinit Rai: You mean what keeps me going, the motivation aspect? So, often the same question comes to me when I see some big leaders, and you know, say, for example, the Prime Minister of India, how does he work 18 hours a day? What keeps him motivated? And the same question, of course, you ask me, right? So, I think the beauty about private equity as a profession is that you are constantly surrounded with some great energy, right? Your founders are coming, they want to build their dream, and you know, and you are involved in that. You are helping them with the capital, and not only capital, but you know, also you know, governance, growth, et cetera, et cetera. So it's fascinating to see things getting built, right? It's just, I think that's the nature of humanity that we all like to see creation, right? And I think private equity, to me, gives that satisfaction like nothing else, right? You see a young business, a dream, kind of coming through over a decade or so. It's just fascinating. And also the difference, luckily, I am a part of several sectors. So I am not restricted to any one sector. So sometimes I'm looking at consumer, sometimes it's financial services, sometimes manufacturing, sometimes... So it's just very fascinating. Each day is different and very beautiful. 

Akshara: So, in spite of being in the industry for 20 years now...

There is no point of boredom.

Vinit Rai: Not at all. Every morning, look at me, right? I'm on an early morning flight to Chennai and, you know, it's a fascinating day. I'm looking forward to meeting many more founders on the way today.

Akshara: True. And actually, that is going to be the second question. Most of your work depends upon an individual, an Indian entrepreneur. So, being in this industry, what have you seen? 20 years ago, an Indian entrepreneur, what is the change today? In the entrepreneur mindset?

Vinit Rai: Yes, huge. So, I think so. When the PE industry in India was starting, for us and for anyone else, right, it's a young industry because, like, late 90s it started, right? So you were typically dealing with the businesses that were coming from generations, right? And those businesses were very close to their heart. They would never even think of selling it or getting external investors, et cetera, right? So the mindset was much more closed than what it is today, right? Today, entrepreneurs are open. Even conglomerates are like raising private equity in their some verticals, et cetera. So the openness is huge, right? And people are willing to sell businesses and all, so. And also it's professionalized a lot, right? The private equity industry has made mistakes, you know, we have kind of learned from them, right? So everyone is becoming better. And I think the value also has been seen by entrepreneurs that if we get an external investor, how it can help in overall value creation. So I think a lot of positive change over the last 20 years.

Akshara: So we spoke about these positive changes in the industry. But if you had to pick two or three red flags in Indian entrepreneurs, because that's the thing that you do. What would that be?

Vinit Rai: See, red flags in terms of an entrepreneur is, I think, you know, you have to understand the other side. So, an investor, right, is not going to run the business day to day, right? For example, if you are selling books or you are selling some food, I don't know what you are doing on a day-to-day basis as an entrepreneur, right? So, the only tool that we have as investors is transparency and communication, right? Because only if I am getting the right information, whether it is before investment or after investment, there are chances that it will be successful, right? So the biggest red flag that comes to us, and which is where we do a lot of work on, is lack of transparency, kind of, you know, putting facts, I mean basically something like, you know, you are not telling the whole truth, right? And you are not kind of being transparent enough. So we, of course, talk to many other people like reference checks. Even when you're doing a basic recruitment, you do reference checks, right? So when we are investing, we do a lot of reference checks to find out whether the founder is transparent enough. And I put it in like three things: like integrity, intellect, and willingness to share, right? So integrity covers the fact that we spoke about, you know. And then, of course, you know, willingness to share is extremely important, right? Because you've got an investor, you should be happy seeing the investor make money as well, right? So that is an intellect, of course capability you should surely be having. So red flags are mainly around that willingness to share, lack of transparency, you know, et cetera.

Akshara: So as we talk about this private equity landscape, let me also put in this. As the Indian economy grows from 4 trillion to 8 trillion, so where do you see this un-capitalized money that PE is missing right now?

Vinit Rai: Understood. Yeah. So I think what you mean to ask is which are the emerging sectors which are, you know, maybe not adequately funded and you know, have which PE is not getting opportunity, opportunity right now, and of course it will happen. So I think a big theme that I am seeing coming, because of course changing regulations, climate change, et cetera, which we are all going through, is the whole circular economy, recycling, et cetera, right? I think it is the need of the hour, right? Where, you know, we get things back. For example, if we are discarding an air conditioner, ultimately it needs to get kind of recycled properly to get back to the value chain, right? So I think private equity is a little short on that today, and I think it's a big opportunity for private equity money to get into those, you know, areas like, you know, recycling could be anything, right? So in fact, recently we did something in the hazardous waste management space where a company takes the waste from large chemical companies and makes it into fuel for the cement industry. Very interesting technology that they have built. So I think that's a huge area that needs to be kind of, you know, filled over the next decade, also if you have to solve problems of climate change, et cetera, that we see. So that's a big area for private equity money, which I think it is kind of missed out as of now. It has to build very, very fast there. Second, what I feel is that for 4 to 8 trillion, ultimately it's all going to be driven by people like you and me, et cetera, right? And you know, because ultimately the growth is driven by people. And for some reason, I think the talent development, HR, et cetera, you know, I think it has been under-penetrated by private equity capital because of certain reasons. And I think it's time that this learning, training, you know, and getting more and more leaders in the country needs to find a more structured way of funding, you know, and I'm sure there will be opportunities that will come up. So I think that's again something which private equity should be focusing on in years to come.

Akshara: Actually, I thought you will be talking about AI, because, you know, that's just too much happening already.

Vinit Rai: You know, so much is happening around AI. And I think, ah, that's, and to be honest, ah, because we come from private equity, you know, that's a very VC kind of, you know, because outcomes are very unknown there, right? You know, in fact, I'm sure you must have heard like a few days back, you know, Mr. Sam is also under pressure, right? So it's not easy, and the outcomes can be anywhere. So it's more suitable to VC type of investing rather than PE right now.

Akshara: So you think the AI part has not grown to that niche type fund for PE?  

Vinit Rai: Absolutely, as asset classes. I mean, the businesses are not yet there for Indian private equity to take large bets right now.

Akshara: Yeah. But even you said about other sectors that you are in, fintech to real estate, lot of things you are into now. Yeah, of course, even consumers, you are into many things now. So with that, if you want to check about a sector or a company, what will the first few options that you look into? Is it the company's macro or sector's macro or the company's execution? Which comes first now?

Vinit Rai: First comes the sector, always. First comes the sector for us, always. Because see, ultimately, you know, you are a platform. You know, PMS Bazaar is doing a great job in taking money from investors at large and allocating it to AIFs, et cetera, right? So why are they giving money to you to generate alpha, right? So that you allocate capital to the right fund managers. If they have to make, you know, 12, 15, 16% IRR, they don't need you, right? And that's how it becomes. Nifty is giving 12, 13% and so on and so forth. So when money is coming to a risky asset class like private equity, the expectation is that, you know, the returns after all the charges, et cetera, should at least cross 20-22%, right? Otherwise, what is the point, you know? And if that is to gross up, that means the companies have to create IRR in the range of 28, 30, 32%. And how does returns come from two things, right? One is the PE multiple, et cetera, which nobody can predict, right? Someone does some war somewhere, you know, the multiples will crash. Something is very positive, some elections are positive, it will go up. It is very unpredictable. So the only thing that you have in your hand is growth of revenues, et cetera, et cetera. Now, if you are putting money in a company in a certain sector, you know, typically when you are putting money in a company, you will see that the company can grow two to three times the industry, hmm? Right? So now let's just do backward calculation. So if the company has to grow at, say, 30-35%, and say it is growing double fast than the industry it is operating in. For example, you are investing in the spices sector, right? And if you want that, so the spices industry should grow at least 10-12% per annum, so that a company can grow 30-35%, right? Because we have got private equity and all that. So clearly, the sector dynamics where the sector is at least growing, you know, one and a half to two times the GDP rate is the sectors which private equity wants to invest. So that when you invest in that company, it grows double than the industry and you create the returns for everyone. So sector comes first, which is the demand side. And then, of course, you look at the supply side of the sector where you look at, you know, what are the sustainable competitive advantages that can be built in this company and moats, et cetera. So those are the first... I mean, is it very fragmented? On what really are you kind of betting on the supply side? So these two things will come first. And once you decided that okay, you want to play in this segment, then of course, you will analyze various companies, meet a lot of entrepreneurs, and then hopefully back the right house.

Akshara: So basically, it is a top-down approach. So sector comes first, then the company. And then the promoter, is it that so?

Vinit Rai: Yeah, I mean, the promoter and the company are, you know, kind of the same. That's the same level now.

Akshara: I mean, the differentiators, those red flags will come on the promoter, right? Of course, if the company's business is very good, but those red flags are coming in terms of, you know, unethical practices, non-communication, non-transparency, then you will, even if it has like 70% return on equity business, we will still not touch it, right? But of course, if that is a positive and then the company business model, of course, we will analyze and so on and so.

Akshara: And when you talk about investor expectations, generally when it comes to a CAT II fund, what happens is that investors come with a Debt  mindset and have FIxed IRR. But private equity doesn't work that way, correct? So if you are going to explain that to a client, what would that be?

Vinit Rai: Yeah, so that's what. So the client needs to understand why he first needs this, right? So first thing is that, you know, you have to graduate to a certain level. So for example, if it's a young client who is early 25 years old, et cetera, just starting from his salary, doesn't come from a very affluent family, et cetera, he is just building his things, maybe category two AIF, private equity is not for him. Because he is just building his life right now, right? You know, this comes at a certain stage and at a certain net worth, right? When you have kind of developed enough net worth, et cetera, to have some risky portfolio, right? So, and why do you want it? Because you want to create some alpha and higher, you know, of course have higher returns. And of course, the softer side is you are really helping some other entrepreneurs and of course the economy, et cetera. But that's more on the intangible side of it. But on the tangible side, you will slowly start allocating out of your extra money. You will start with, say, 2 rupees, 5 rupees, etc. Because it takes a lot of patience to be in this asset class, right? Because it is unlisted, there are lock-ins in these funds. You can't really walk in and walk out just like a mutual fund or a PMS, et cetera. So that is where the journey is that it will kind of come a little later in your life, right? More from a financial perspective, when you reach a certain net worth, et cetera, when you will kind of get in. So if you are looking for a fixed return, fixed deposit, you should not really be getting into private equity, because then it is both unpleasant for the fund manager as well as the investor.

Akshara: And also, when you talk about fixed returns, liquidity also plays a vital part. Of course, this is a bit illiquid and also has a specific holding period. So if an investor comes with a mindset of two to three years, do you think private equity should still be part of his portfolio?

Vinit Rai: No, two to three years would be early. I mean, would be less, because, you know, just understand, you know, unless you are only going for a pre-IPO fund, which is more like a late-stage private equity, which a lot of funds, of course, are there. But before that, you know, because businesses take time to grow, right? Ultimately, see, just like I have spoken that the entrepreneur has to be transparent to me. In the same way, I have to be transparent to my investor. I don't want unnecessary confusion that you said this, and this happened, and that happened, right? So we are very clear that we are, as a PE industry, getting into businesses. They may not be startups, but still, they are early-stage, maybe from 50 crore to 500 crore revenue. So they are just growing, right? So they will take time to mature and, you know, get to public markets and get to other exit events, et cetera. So anything less than five years holding in a company like this, you know, should not be expected. It may happen if you are lucky, but a minimum of five to six years holding period on a single company is extremely important.

Akshara: And also, when you see in today's generation, there are a lot of young entrepreneurs coming up. All young entrepreneurs, you can see many companies have already come into IPOs from young entrepreneurs now. So with that sense, what kind of mindset do these young entrepreneurs have? Because their blood is very fresh and they have an appetite to take a lot of risk, and they are coming for a fund-raising part, which was not earlier. But as you said that...

Vinit Rai: Correct.

Akshara: ...it can be more convincing from your end with that. But it can be, you know, that can be a bias as well towards it. So how do you avoid this bias towards it?

Vinit Rai: Yeah. So touchwood, I think in our history of 20 years, in fact, biases, Akshara, you will be surprised, are on both sides, you know. So some, I don't want to name, but there are certain practices where people don't want to back after the age of, say, 55 or 58, right? Because then they feel the entrepreneur has already passed his age, et cetera. But touchwood, in our case, you know, for example, we backed this company called Sonalika Tractors. It's a big brand now in North India, and that was started by the founders only after the age of 60. In fact, we have one company today which is NIC Ice Cream, right? It's an ice cream company that the founder started this business after the age of 63 or 64. So touchwood, I think we, as a platform, have kind of stayed away from this age bias, right? And we have remained very neutral as long as we get that integrity, willingness to share, you know, intellect, those three aspects, you know, whether the founder is 20 or 70 or, ah, sir, 80 or, you know, been okay with it. And with great results so far. So I don't think that should be a criteria at all, at least personally, that's what I feel.

Akshara: And what if there is a default? So if there is a default in any of the things, it can be. So how does JM Financials and Vinit react to it?

Vinit Rai: Yeah, sure. Yeah, absolutely. So any time a company gets funded, of course, there are large shareholder agreements which kind of capture a few situations, right? So one thing it kind of captures is like, suppose the investor has come in at, say, ₹300 per share, and now the promoter wants to raise money at, say, ₹250 per share. So then he has to kind of find the mechanism such that my entry price also kind of comes down to 250, et cetera. It's called anti-dilution in a technical way, et cetera. So that's more on the capital part. Then the second part is when businesses are not doing well, right? Now that can be again in two scenarios. One is an unforeseen event, something like COVID, right? It hurt so many businesses, right? Even in our portfolio, you know, when suppose vending machines, you know, there's nobody to go to the airport, etc. So of course, external situations will suddenly hit companies. As long as again, the transparency and communication is maintained between the promoter and the investor, and we are all kind of collectively working towards finding a resolution, it's okay, right? So that's fine, because nobody can predict all these things. On the internal side, again, there are two situations. One, of course, is just that you are not doing enough, that you need to appoint some CXOs, et cetera. So then it's a lot of push, right? It's a softer push, right? Again, we are still not getting into agreements, but it is more like nudging and pushing and singing again and again and again to discuss and move forward. And then the third, where unfortunate situations where, you know, you suddenly get to know that the promoter is not behaving transparently. He is doing some ugly things here. And that's when, of course, you have your clauses to protect you, and then you will threaten legally, et cetera, and then you kind of try and get an exit and hopefully take at least the capital back, or something, even if it is at a loss to some capital, because you need to get out because you lost faith with the promoter.

Akshara: And when you talk about the deal flows in private equity, if you see a lot of reports that are coming up, that certainly say that the deal flows have significantly reduced over the last few years. Okay. So, like the reports generated by IVCA and EY, the amount or the number of deals? The amount.

Vinit Rai: Yeah, amounts could be, number of deals are happening, yeah. But the amount has actually... price might have contracted, possible.

Akshara: So do you think that is a threat to the private markets now?

Vinit Rai: No, not at all. I think, see, it's just like any public market, we go through cycles, et cetera, right? I think in times of billions... I remember the time when they had just started the industry. I mean, the industry is just getting started, 2000 whatever, say, and we were, I think, at 8-9 billion per annum, whereas now it is crossed 50 billion dollars per annum, right? So it is also in context of how the industry has grown from an amount point of view. A couple of years here and there, again, COVID year was a very big year, then it came down, so that's okay, because private equity funds invest over a period of time, so annual numbers may not make so much sense from an amount point of view. So I don't see that at all. In terms of the number of deals, I think it is kind of kept increasing because a lot of fund managers are coming up, et cetera, and a lot of entrepreneurs, the overall opportunity is only growing. So I don't see that as a threat at all.

Akshara: And when you say a lot of fund managers are coming in, so when you started JM Financial Private Equity as a part of it, we had very less competitors, or really less peers. But today, as we speak, we have a N number of them. But the deal flow is such that if you want to capture one, there will be two-three competitors along with you. Yeah, so how is JM Financials going to back that for sure?

Vinit Rai: So again, I think, from our strategy point of view, we stick to this: we look at young companies, we don't do startups where again, there are lots and lots of fund managers, angel networks, et cetera. And neither do we do very large deals where global funds are competing. So, our strategy has been to put 5 to 15 million dollars in a single company, where relatively the demand-supply is again still very favorable. So for example, as some people say that you may be a zero-revenue company and may have a great technology, you may have 50 funds looking at that deal. But if you are a basic, traditional packaging manufacturer and you want to raise, say, 5-6 million dollars, there are not many funds. So we are actually just sticking to that anomaly, and I think so far, you know, just to give you an example, if you have invested in, say, 10 companies in our third private equity fund, which was a 2023 fund, we would have looked at least 750-775 deals. So, you know, that's the kind of deal flow we are getting in our space. So I think even now, it is kind of very under-penetrated.

Akshara: So, you know, in your career, you have handled 50+ deals and almost so many crores of money have already been deployed. And how would you strike this balance between the LPs' pressure on one hand, because on the other hand, you have these companies that need at least seven to nine years to pick their valuations. But on this side, you need to pay the DPI (Distributions to Paid-In capital), I think, for LPs as well. So how is this balance?

Vinit Rai: No, very, very relevant question, Akshara. And I think every fund manager like us, of course, goes through this day in and day out. It's tough. Let me be very candid. It's a very difficult balance to strike, because, you know, when you have invested in 10 companies, typically from a fund, just by the law of numbers, you will have two to three which are not doing so well, you know, you will have two to three which are average, and then there are three or four which are hitting it out of the park, right? And those three or four you don't want to sell at all, right? You want to just keep holding on. But you have to balance again, as you said, that investors have given you money, it's a registered vehicle, so you have a fund life, et cetera, et cetera, right? So you have to give money back as well. So that is where, at least for us, what has worked is that at every stage, touchwood, especially in the bucket where three or four companies which are doing extremely well, you do a partial exit, right? So I will give you an example. You know, we had invested in this folding carton packaging company, Canpack Packaging in 2021, and they started growing very well. So what we did is in 2024, a larger private equity fund called InvestCorp came in. We sold a part of our stake, and they put more money in the company. And of course, we returned money to our LPs, and of course, the company, with that new money from the new PE fund, is also growing even faster, right? So it solves two things: one, of course, I would give some money back, and second, the company has now started growing even faster. So my final exit will capture the entire value that you are talking about. So the answer is that it also depends on what your overall portfolio is looking like, right? Because your goal is to return the desired IRR to the LPs. True. So that is where, you know, if you think that some of them are not really doing well, it's going to become very difficult, then maybe your winners will have to hold on a little bit longer and exit it at a much higher price, right? So it's a balancing game, and it's not an easy situation. But I think the way, at least we think about it is that, in your winners, you take partial exits and keep moving on. Companies which are on an average doing okay, not going down, but not extremely well, then you kind of take full exits because they are not anyway going to cross very high returns. So again, you focus on returning capital there. And then, of course, a couple of companies which are not doing well, rather than holding on too long, you try and exit it because at least you get your capital back. And so that's how you balance the entire thing. And it's a very dynamic situation. Okay.

Akshara: And if you have to give one option which is easier to handle, is it the LPs or company?

Vinit Rai: The company, of course. I think that's just basic human psychology, right? Today, even if you go to a Taj hotel or any five-star hotel and you pay ₹500 for a coffee, and you are not happy with the coffee, right? So then you will suddenly call this guy, "Oh, this is wrong, this is wrong," et cetera, right? And as Indians, it is more so. I feel that the minute you give money, you are in a stronger situation, right? And you want to kind of expect that you want to be so. Of course, however, so for example, when as a fund, I am giving money to the company, I am in a stronger position. Similarly, LPs are giving money to us, so they have all the right to ask us difficult questions and all. It's so do we, absolutely. You guys are the neutral platforms who ask the tough questions to the fund manager. Very, very true.

Akshara: One actually, when we had a discussion even before this interview, you were talking about how private equity works in global markets. Yes, of course. So if you could explain that to the investors today.

Vinit Rai: Yeah, so I think globally, you know, touchwood, I mean, for them, again, the industry started much earlier compared to India, right? They must be at least 25-30 years ahead of it. So of course, their ecosystem has developed much deeper. There are many more funds, number of stages also. Every stage is covered by multiple funds. A fund wanting to look at an exit need not actually sell stakes in companies but go to secondary funds. So there are specialized secondary funds in global markets which will buy your stakes. So you are at much more peace, and things are much smoother, right? So and that is where the alpha that they have kind of created, of course, that helps them, right? So they have delivered value over a 20-25 year old history that they are at least 300 to 500 basis points annually, where public markets would have given, say, 7-8%, and private markets in the US would have given, say, 10-12%. So people have got much more faith in the system. Their pension funds allocate so much capital to this industry. In India, it's not even started, right? So globally, it is far more developed, but India will catch up over the next decade as well. So hopefully, we will also get there as a country.

Akshara: So where do you see difficulty in exit? So what is one point where you say, "I feel difficulty in this part to exit"?

Vinit Rai: In a specific company, you mean? It can be in a specific company, actually.

Akshara: It can be in a specific company, actually.Yeah.

Vinit Rai: So as I said, right, Akshara, the simple thing is that if the company does well and is really doing very well compared to any industry. A company which is not doing well is always a challenge, right? So that's where we work with the promoters and say that now it is time that we have to find a strategic, larger company or a larger family to kind of take over the company, and in that process, we have to exit and get whatever. So it's when companies are not doing well. Out of 10 times, it is a merger and acquisition exit. So a larger company will kind of come and take over the business, and that's where you find your exit. And of course, it takes time. But touchwood, at least again, in our history, even in the most difficult vintage, when the global crisis happened (GFC 2008, et cetera), which was the worst, right, we could exit all 13 companies we had in our portfolio. Even people who were not doing well, we could get an M&A exit, a buyback, et cetera. So we are the only, and very few fund managers of that vintage, which have a zero percent write-off account. Otherwise, people still hold shares in that vintage.

Akshara: Very true, I think that we were lucky enough.

So I will just take a few numbers. Private equity investments in India reached almost 60.7 billion USD across 1475 deals in 2025, the second-highest value, which has 8% year-on-year growth. Okay. But you know, in quarter one of 2026, what happened was the deal volumes have significantly reduced. It became a... the number of deals and value, average deal value, the transaction also has come down a bit, and the worth is only 16 to 20 billion dollars. Yeah, yeah, so which is a 48% drop from the value. Yeah, 48% is huge, almost a 50% drop, I would say. So, how do you position this mid-market now? Because this is the data that talks now. So how are you going to position this?

Vinit Rai: Yeah, sure. So I think one, of course, just as I mentioned earlier, private equity deals also take longer to close. They have longer cycles. So my first reaction to this is that we should not just look at quarterly data. It is a different asset class. So you should at least look at annual data. That is first. But the second thing is that even so, what I am hearing from you is that the number of deals is increasing. Right? So clearly, the average deal value is falling, right? So basically, what is happening is that more and more mid-sized entrepreneurs are also turning to private equity, right? Which is a good thing for us. And what we have to do, because the number of deals are increasing, we have to gear up with our own systems and processes to do it faster. Right? So for example, one thing which we are already doing is that we kind of make a list of a lot of segments. Right? For example, we will not call 'consumer' just 'consumer', right? Consumer will become even laundry, it could be apparel, it could be ice cream, it could be sweets, whatever it is. It could be spices, yes, of course, right. So what you do is you kind of create so many sub-segments within a certain sector, say, and then you have logistics. So you kind of, for example, let's say that we have created 150 segments right across the four big ones, say, manufacturing, consumer, logistics, I agree, whatever, five-six broad sectors. You break it up into, say, 150 small, small sectors. And then you get the team to do all the sector work in advance, right? So you are well-prepared: how that specific laundry market is growing, or how that specific sweet market is growing, what is the competition, how many players are there in each segment, et cetera. So if you have done all that work in advance, when you are looking at that specific company and deal which we discuss about, then your analysis is faster and you can react faster to say yes or no. So your homework has to be much higher, and it will only become higher and higher as we see the next few years, so that you still stand as above your own competition.

Akshara: I think that was a very positive answer, in spite of the negative data I presented. But still, it was very positive. I think that's the spirit of every Indian fund manager.

Vinit Rai: Absolutely.

Akshara: Even when the markets are down, they will say, "We are very bullish on India."

Vinti Rai: Yeah. So I think every... Structurally, if we all believe that the 4 to 8 trillion which you mentioned, right, is going to happen, 

Akshara: that's what we are anticipating. 

Vinit Rai: And it is happening for the last couple of years here and there. So then, businesses have to grow and things have to happen. So we should stay positive.

Akshara: Now, we have spoken so much positive about the portfolio companies and about the industry as well. So let me take this one question. About the BFSI sector, you know, you have been invested for nine long years and still you had to book losses. For example, for every ₹10 invested, he took back ₹6. Correct. That's how it was a significant haircut. Absolutely. So what went wrong first, and how did you handle it?

Vinit Rai: Sure, absolutely. Good question. So it happened. So it was in the affordable housing finance space. So of course, if I look back, you know, in 2016-17, it was a very booming sector coming up, et cetera, right. And deals were happening at that time in those companies at four to five times price to book multiple. Other deals were happening at very, very high pricing. And that's where we, of course, got into this company, etc., at a much lower price. But in hindsight, just because I got in at a lower multiple doesn't mean that I will make the returns, right? And the biggest mistake I think happened there is that, you know, one of, of course, you know, when you are dealing with loans, you know, it needs a certain vintage. So for example, if you give a home loan to someone as a company, you know, typically these loans are 15-year loans, even higher, right? At least 10+ years for sure, even in the affordable segment. So it takes time for you to see whether you have chosen the right home loan borrower, right? So he may pay for 12 months, 18 months, 24 months, but then start defaulting, et cetera, right. So that, in fact, has been a big learning. And of course, COVID also happened. And when the affordable segment means you are dealing with drivers, mechanics, and people who are running on rental income, etc., so that hinders their earning ability as well. So that factor also of course played on this kind of business. But the learning and the mistake, you know, is that when I... and that's what we of course have taken as a corrective measure. So that you have to get into businesses of borrowings when they have shown a history of at least 7, 8, 10 years, you know, where their borrowers have paid on time, etc., rather than getting it very early, where only two years of history is available. So that is the thing that was a big learning and a mistake on this one. And of course, you know, whatever we had planned that post-investment, we will be able to get systems, processes, and better management, etc., that didn't work out the way we would have wanted it to. And so these are the two factors which led to us to kind of take that loss and more.

Akshara: And also, if I could take one positive story from your portfolio companies, what would that be? In terms of an example that has done well.

Vinit Rai: Yeah, there are many, and of course, today's company which you see in the listed domain, Sonam Clock? Was it? Such a huge market cap company today, which was our PE Fund One company, which is a young business, and it's been a phenomenal success, you know. And the company continues to do phenomenally well. I wish we had a 30-year fund life so we could have never sold, but unfortunately, not. So that has been a great success. The current one, as we spoke about, Canpak Packaging, is doing extremely well, you know. It has almost multiplied its profits four times in five years, so it's doing extremely well. Yeah. So I think, touchwood, we have had some great successes and some more great successes to come.

Akshara: And also, you know, you should be the brand ambassador for every company that you want, because when I see your LinkedIn, you know, there is always the video about the company that you have invested in.

Vinit Rai: Thank you. Yeah, of course. That's the way we associate, and that's the bond we have with the founders, right? So we really enjoy working with them, and there is a lot of respect both ways. So it's that's how 20 years vanish and you don't realize it.

Akshara: And I think that significantly differentiates you from other fund managers in this private equity space. I don't think so. Every fund manager comes out and talks about their company on a public forum. That's very rare.

Akshara: And let's come back with one last question, because about your book on private equity, what made you write that book?

Vinit Rai: Yeah. So Akshara, that's a little bit personal, you know. So just to kind of give you a background, when I was growing up, due to certain personal situations, the textile industry went through a downturn in the late 90s, and my father kind of lost his job, etc., and I was in my 10th grade. So it was not such a pleasant situation. So at that time, I started taking tuition for younger students so that I could make some money on the side, and all of that. So I realized that teaching is something that I like, and that has continued with me for the last... so even now, I go to Narsee Monjee College to teach them venture capital and all of that, you know. So I enjoyed teaching. Just for the passion, I just love it. So at that time, so many people used to keep coming on LinkedIn, etc., "I want to know what is private equity? How can I get into it?", etc. So I said, "How do I solve this issue?" So I decided that let me write a book kind of simplifying private equity, right? And that's where Zebra Learn came in, it's a platform that helps you do that. And so, using cricket, I will introduce private equity, you know, with simple examples, so that an early 20-year-old or someone who has no kind of finance background can also relate to it. So it's basically for beginners. It's not for professionals like us who anyway know the world, etc. But people who have no idea about private equity and they want to... they are in their early 20s and want to make a career, etc. You know, in fact, it has a lot of podcasts with many other MDs in the PE world about how they started their journey and how they made it. So this was an attempt to kind of democratize the concept of private equity so that it can be understood in a very simple way, rather than all this technical jargon which we have spoken about in the last 45 minutes as well. And I think, touchwood, I am very happy about it.

Akshara: I think you are still doing it, because you are educating all our clients, investors, and viewers about how simply can people understand private equity. And in spite of the data not being available fully, only the investors get the data, but non-investors, if they want to know about private equity, the information is not available everywhere. So I think you have done a great job, sir.

Vinit Rai: Thank you, Akshara. Thank you so much for saying that. 

Akshara: And thank you for being with us today and educating us as well as the audience on private equity and about how you handle it. We knew more about Vinit Rai and even more about private equity today. Thank you, sir.

Vinit Rai: Thank you. It's always a pleasure to have a chat with you. I just have so much fun. So thank you for having me.