Transcript

Unlisted to IPO: Where Does the Biggest Wealth Creation Happen?

Akshara: Hi everyone, welcome to Fund Manager Interview Series with PMS Bazaar.This is your host Akshara Menon. India's investment landscape is changing rapidly. Today, investors don't have to wait for companies to get listed to be part of their growth story. From startups to pre-IPO businesses and listed companies, there are opportunities across every stage of a company's journey. But that also raises an important question: Where is the real wealth created? Before the company gets listed or after? And in the market where IPOs are attracting so much attention, how can investors identify businesses with potential to become tomorrow's market leaders? That's exactly what we're going to discuss today. Joining us is someone who has spent over 25 years in capital markets, investment banking, and corporate strategy with deep experience in identifying high growth businesses before they enter the public markets. It's a pleasure to welcome Mr. Sivaramakrishnan, co-founder and chief investment officer of Sincere Syndication. So welcome to the show sir.

Sivaramakrishnan: Thank you Akshara. It's a pleasure to be here.

Akshara: Actually let's talk about Sincere Syndication first. You know it spans around wealth management and of course investment management and again on investment banking. So what are the thought processes behind founding this company?

Sivaramakrishnan: I'll tell you an interesting line that took place that led us to formation of the company. First of all, I don't come from this industry of fund management, neither fund management nor from the world of banking. Of course, I had a banking stint earlier. Earlier I was CEO of a coal company. I used to mine coal in Indonesia and export into India, China, Southeast Asian markets. Prior to that, I was heading a power company and before that was CFO of a group in Southeast Asia and prior to that as part of investment banking in a large conglomerate. So my role has panned through industries such as banking, investment banking, power sector, coal, mining, telecom, so on and so forth. Right? These are the set of industries that I've been part of.

One great learning that I've had during my career is that it's not about what business that you do that is as important as management of capital itself. Finally, the most important lifeline to any business and the success formula is the ability to manage capital. If at all one is able to manage capital efficiently, whatever the business it is, they could turn it around, they could make it successful. Isn't it? It's all about capital management of the day.

Now when it is about capital management, there are two sides of the same coin actually. One aspect of capital is to be raising capital to meet the growth needs of enterprises, right? That's investment banking. And the other side of the same coin is about managing capital that has been earned as in to grow and multiply capital. So there are two aspects, right? One is the ones who are going to be placing that capital for the purpose of multiplying that capital, and the other one is receiving that capital in order to use that productive use to multiply their own enterprises. So these are both sides of the same coin. Therefore, if you look at it carefully, if one is a good manager of capital, one should be able to identify the best of businesses, right? And invest money in those businesses and also be able to raise money for enterprises. So that's the fun of what we have done so far.

Having been part of businesses earlier, having led businesses, we don't draw the future of business on Excel sheets, right? I mean having due regards to my friends around in fund management community—most of us typically come from fund management background, fantastic qualified people around—but the lacuna in the industry is that people do not know what it takes to do a particular revenue, right? What it takes to achieve scale in business because we have seen it on paper, we've seen it hear it from entrepreneurs, but have they done it themselves? If only people do it, you realize what it takes to do it. Therefore having been part of business, all of us in our entire team, we're all from diverse backgrounds in running enterprises, building enterprises. So we all got together and founded Sincere Syndication Integration in the year 2014. It's been 12 years of humbling experience of growing and multiplying capital.

Therefore, we are present today in money management aspects of money management—being wealth management, that is to invest money according to the needs of every investor, understand the needs of every investor, plan and create portfolio solutions fitting their needs. Right? We invest in India, we invest abroad, we invest across all asset classes. That's about being a multi-family office wealth management setup. Right? The other is being an asset management where we understand what we know very well. We focus on equities. We have multiplied money in equities in our career. It's been about 25 years of investing in equities. So having been there for the last 25 years, we learned a bit. So employing those skill sets, we grow and multiply the money of investors in Indian markets and also in the global markets. That's asset management. And the third, of course, is investment banking where putting both these resources at work, we sometimes work on fundraising mandates for our clients. So those are three aspects of our work.

Akshara: I think you've brilliantly phrased it today sir. And our focus for today's interview is more on the alternative asset side of it. When you talk about capital management, you know generally what happens people go for different strategies according to their risk management. But you know in this Bharat Transformation Fund strategy, there's a combination of startups, there can be a combination of pre-IPO, and then listed equities as well. So if you could walk us through it.

Sivaramakrishnan: Well, Bharat Transformation Fund—that's what we're talking about now. If you look at the annals of Indian stock market history, we have seen enterprises—great enterprises—emerge in India such as Bajaj Finance, HDFC Bank, Reliance Industries to name a few. Right? But if you go back in the trails of history, you'll find that Bajaj Finance about 25 years ago was an unknown small entity, right? That people did not know that it existed. And Rakesh Jhunjhunwala invested in Bajaj Finance—who knew about it? Likewise, you can find the case of several such companies that were not even micro caps, probably miniatures, you know, nano caps at some point in time, and today they become large caps. What a phenomenal wealth creation that has happened!

Now if you look at the portfolios of great investors such as Damani, Rakesh Jhunjhunwala, right? You will find that they wouldn't own HDFC Bank, ICICI Bank, Reliance Industries. Why? I mean are these bad companies? No, certainly not. They invested in enterprises before others discovered them. They invested before those companies got discovered by the markets at large. That's where the wealth lies. Therefore, investing in transformation is where the largest quantum of wealth gets created, not after the transformation is done and dusted. When you invest in HDFC Bank, probably you get to still make money—it's a fantastic company to own, ICICI Bank is a great company to own—but you don't end up making 3x, 5x, 10x of money that you would actually be able to if you're going to be finding the next Bajaj, the next HDFC Bank.

So sum it up: investing in transformation is the thesis that we hold. We don't invest in value, we don't invest in growth, but we invest in transformation. We invest in transformation of enterprises, and that's a combination of growth and value. I'll tell you why. Transformation happens only when there is growth. But when the growth gets captured in price by the time you invest, you're not going to make money. Therefore, you need to be value conscious while investing in growth.

Let's understand this a little more to reason as to why we do invest in pre-IPO, right? We have been investing in the public markets for quite a long time. We have a portfolio management services scheme called Metamorphosis where we invest in public markets because there are a lot of value in public markets too. Having said that, look at the whole lot of enterprises that are emerging in India. In the last couple of years, as much as about 500 companies got listed—500 enterprises got listed in the last 5 years. Let me tell you, there are at least another 500 enterprises waiting to get listed in the next 5 years, and there are brilliant entrepreneurs, there are wonderful entrepreneurs over there. When you're able to find such enterprises after they get listed, right? You probably find them catch them at market valuation.

Take the case of a defense company where we're deploying money today. As I speak, we're deploying money in a phenomenal defense company, a deep tech defense company which is one of its kind in India. It'll produce India's first autonomous boat. Talk about autonomous vehicle—Tesla's autonomous vehicle—this will be producing India's first autonomous boat. They got an order book of about 650 crores. Right now if they achieve about 60 crores of profits after tax as we expect them to do, 60 crores of profits—typically a defense company might get quoted in the market at about 50 times of profit, 60 times of profits. Right? So 60 crores in profits after tax means that the company's valuation could be nothing less than 3,000 crores in today's context because there's no defense company in India that is quoted anything less than 50 times of profits, 50 times of PE. So about 60 crores of profit means that the company's valuation could be as high as 3,000 crores when it gets listed in the market. Now listing could possibly happen in about let's say a year and a half time, by which time profits could possibly be higher than that. Right? But if you're able to find this company at a valuation of 10 times of profits, 12 times of profits—is that possible at all? It's not possible in the public markets because it's already discovered. But when you go to a stage where you're going to be finding the company before it's discovered by the public, which is pre-IPO, right? You can find these opportunities and get to invest at great value.

To simply put it this way: if somebody's going to be financing a large developer, right? In two stages—one after construction of the apartment upon delivery, you're going to be buying an apartment versus financing the developer right at the time of purchase of land itself. The time from that point in time—from the point of purchase to finance the developer, from the point in time the building is constructed and sold—there'll be two things that happen. First thing is that there'll be an increase in price. Right? It takes about 2 years to get that building constructed, deliver value, create value—it was barren land, now there's a building. There'll be an increase in price over a period of 2 years. Let's say it goes to 10,000 plus per square feet initially at the point of purchase, but when it comes to the point of delivery, you'll find it quoting at about maybe 14,000 per square footage. So there's an increment of about 20 to 30 or 30 to 40% in the price that goes in the market. Right? Now that's one part of the story. The other part of the story is that you get to buy this land at that point—that is at the point of financing—at a much cheaper price because you're going to be getting in early. Therefore, getting in early is all about the game. It's not about just compounding of earnings.

So in pre-IPO market, we can find enterprises—great enterprises—at much significantly lower value than what it could quote in the market. Therefore, in order to capture value of time, we invest in pre-IPO. But in order to do that, it's not about sitting here looking at getting all these quotes from varied brokering companies finding those pre-IPO opportunities. That is not the way it is, right? You don't make money by investing in—with all due regard to great companies such as National Stock Exchange or HDB Financial Services, Tata Capital. Nobody makes money by investing in these sort of enterprises because when the price gets quoted in the public market, the pre-IPO price that gets quoted on the public market—value is already captured because it's available to the public's eyes.

The enterprises that we invest in pre-IPO—we go and sleep in the shop floor. Okay? Right? Meet the founder, sleep with them, eat with them, right? Move with them, behave with them, know them, move closely with them, understand them, understand the businesses, and then go and invest. Therefore, this fund is going to be constituted of largely pre-IPO opportunities and public opportunities—certain set of companies that are already available in public market, right? So, it's largely constituting pre-IPO and some portion of money goes into public market as well. If we find disruptive opportunities in emerging enterprise in early stage, sometimes we may co-invest along with some venture capital or private equity fund. We would limit it to 5% of our exposure. We wouldn't want to be focusing significantly on that because risk is higher there. But over here with pre-IPO, honestly we did not find a significant risk because these enterprises are not startups—they are mature, they are really profitable, they're going to be making a lot of money. But we're not going to be losing money given the fact that we're going to be investing at a much lower valuation than the public market valuation itself. So pre-IPO plus public market is going to be the larger part of our portfolio.

Akshara: You know, last few years, lot of pre-IPO companies or pre-IPO funds have come to the market. So that was completely focused on this pre-IPO and where IPO is their main exit. But in this case, is the IPO the main exit or do you want to hold it even after listing because as your fund is also into listed equity space?

Sivaramakrishnan: It's all about finding those expected IRR. If you find that there are better opportunities emerging post listing—better opportunities emerging elsewhere after the company gets listed—definitely wouldn't mind exiting from the company. The idea is to do something like this: our Bharat Transformation Fund has got one of the lowest tenure years in this particular private market space. Normally a typical private equity will come with a fund cycle of 7 years. Ours is 5 years. So this is the lowest lock-in period for any private equity fund in India. So this is so to say it's not typically a private equity fund. A private equity fund typically has got an investment cycle of as many as 5 to 7 years in a company. Right? Our investment cycle in a company is going to be typical anywhere between one and a half years to 2 and a half years. We're going to be getting in about anywhere between 12 months to 18 months, 24 months before IPO. Say maximum 30 months before IPO. Stay with them. Upon getting listed, we would like to exit unless and until if at all we find that this company continues to be far more attractive than any other company that comes up in pre-IPO, we may still hold on, but otherwise we'd like to exit.

Therefore in 5 years cycle, we would like to exit in the first cycle in about 2 years time, 2 and a half years time. Let's say 100 becomes 300 or 100 becomes 250, we would like to exit and possibly return the funds to the investor right in 2 and a half years time. Or else we may run it for one more cycle. Let's say 100 becomes 250 and again 250 runs for another one more cycle of same two times, in which case it's going to become something like 250 becomes 500 and 500 could possibly become 150. This is the objective of running this fund. It's about to deliver about 4 to 5x value creation in a period of 5 years. This is the objective of the fund.

Akshara: You know, if you see last one or two years, from the investors' perspective towards unlisted, you know, allocation has increased and the allocation towards unlisted has significantly increased rather than equities. So their first aspect is: where is the actual alpha created? Do you think after listing they are missing out on the expected alpha, or is it so like the hype of pre-IPO fund is still existing?

Sivaramakrishnan: There is so much of hype coming into the market in unlisted space, right? Go back to 2011, right? Those years when we used to be actively investing in the market, even 2008 or 9—it's always the case that let's say Tata Steel quotes in steel industry at about eight or nine times of earnings. Those days, even 8 to 9 times of earnings was higher for steel company. Today even 15 times is considered to be fair value. 8 to nine times of Tata Steel is still a large cap. The large caps quote at about 10 times of earnings. A small cap is supposed to be quoting at four to five times only in the same industry. Likewise, if the large cap is quoting at 20 times, the small cap typically quotes at 10 times in the same industry. Right? That is the structure of the market in 2008, 9, 10, 11. Right? But today what is happening? The small caps are quoting at much higher valuation than the large caps. Right? When large caps quote at 20 times of earnings, the small caps in the same sector at 30 times, 40 times of earnings. Why is this anomaly? Why is such a strange reversal that has happened?

Now we need to understand that risk capital, right? Public's money, common man's money is willing to plunge into this volatility in order to find high returns. Money chasing high returns—as simple as that. Now money that has to chase high returns should also be willing to wait with more patience and also willing to see more volatility. I think the public is getting more mature today, right? Therefore the shift from large cap ideology to small cap has happened probably in the last decade—the decade of 2011 to 2020. Post-COVID, there has been a substantial new change that has happened. You know what it is? We just mentioned that right—the public's attention moved beyond small caps. So what is the last bastion of opportunity here? That's the unlisted space right now.

Classify unlisted space into three buckets actually. The first bucket would be enterprises which are startups—early stage which are seed stage or probably series A fund raise, series B fund raise. Let's keep it on one side of the table which is largely the stage of funding for a venture capital fund. It's a brilliant area of course, but the problem is that out of 10 companies funded, probably two of them succeed, three of them succeed, rest of the seven of them wouldn't succeed. One needs to be conscious of that. If you take cognizance, then this particular investment opportunity will be left out for most of the investors. They wouldn't want to get into this piece at all.

Now move over to the next stage, which is the growth stage. A stage where the product market fit is found. Right? The go-to-market strategy is established. They are growing. They are profitable. They have found profits. But now they need more capital to be able to scale up significantly. This is the J-curve point right or the hockey stick point when it emerges. Now if you're able to find fantastic entrepreneurs, brilliant enterprises out there have the right framework to find them and get into them at the right point in time, right? Then this element over here is much lesser.

Move little further northwards, and here is a point where they have started growing right and they are probably about 2 years to IPO. And if you're able to find such enterprises which are fast growing—growing at about 50%, 60% year on year, 100% year on year—right? And they are cash-guzzling—they generate a lot of cash in business and set for IPO in two years—we're lucky to find such enterprises 2 years before IPO. I think that's a phenomenal market to invest in.

Now the problem in the segment is that when you talk about the average of people towards investing in unlisted enterprises—very high today. Now what are they searching for the most? You know, we talked about pre-IPO opportunity today—National Stock Exchange, NSE, right? Everybody knows about it. Every Tom, Dick, and Harry knows about it. It also means that when every Tom, Dick, and Harry knows about it, talks about it, the value is fully captured. As simple as that. Right? When everybody talks about something, the value is captured there.

Likewise, when people talked about HDFC Financial Services—I just mentioned this—great companies, I'm just talking about valuations here. Right? Phenomenal companies, Tata Capital, HDFC Financial Services—but what value you're going to get? You cannot be investing in such companies at about eight times the book value, nine times book value as it quoted in the unlisted market.

Now what people understand about unlisted market is largely what is brought to the table. You're going to be buying vegetables in the wholesale market—you're going to be buying, let's say, tomato at 1 kg at about 40 rupees. But when you're going to be buying the same thing in the local vegetable shop, you're going to be buying it probably at 100 rupees per kg of tomato, right? What is available in the wholesale market at 40 is going to be available in the retail market at 100. Now the question is: if you're going to be buying into the retail market, right? You cannot buy it in the retail market that is in the shop and sell it to your neighbor because he can also buy it at the same price. That's what Tata Capital, NSE, and HDB Financial Services available in the unlisted market is all about, right? But if you're going to be making investments in unlisted market, you want to make money there, then you should be going to the wholesale market. But over there, you cannot invest for one buy for 1 kg. You got to be buying for 100 kgs, right? So here we go to the company. We do primary research. We do fundamental research. We work on the first principles. Find those enterprises. Work on a brilliant framework. Find those enterprises. Walk with them. Walk the talk with them and get them listed and then exit.

Akshara: I think that was a brilliant analogy that you've given—very simple as tomato available in the wholesale market as well as retail. But the one thing that we need to think about is the liquidity—that's the elephant in the room. Generally what happens is that the liquidity that an investor gets in listed space, they're not the same in unlisted space as well. So if he's coming within—because you have a very less portion to startup as well, so 5% of it and also major portion in your pre-IPO and a part of portion listed—so how is the allocation bifurcated? First question. Second is: how is the liquidity maintained here?

Sivaramakrishnan: Well, the largest portion of opportunity to capture here is the pre-IPO market, right? Companies are set for listing in 2 years time as I said. Now we would like to keep this as the maximum portion of the entire fund itself—possibly about two-thirds of the fund will be allocated towards pre-IPO opportunities. Here we find reason is that as I said, the maximum value gets created here. These are all proven enterprises, established enterprises—just that they are before listing. If you're going to be capturing value, we capture value—to put it honestly speaking—at as much as 50% discount to market valuation to as much as 90% discount to market valuation. These are not bad enterprises. They're brilliant entrepreneurs, wonderful enterprises, but they need money now, right? Because by the time they do a small dilution today to raise money to feed into their growth, and when they hit the growth cycle grow very fast in the next two years, the value that they find in the public market is very high. Therefore the capital that they take from us is small—they want, they don't want to dilute more obviously, they wouldn't want to dilute more because the value is not fully captured in the enterprise, right? So we invest a smaller amount—rather they take a smaller amount from us—grow and exit there.

So this is two-thirds of the portfolio, and close to almost one-third of the portfolio will be listed equities. There'll be a small exposure to our startups. It's not a mandatory thing. We have found some, we keep finding some brilliant ideas. Again over here, we don't want to put our money chasing behind some company that burns huge amounts of cash. That's not the point here. We'll find some disruptive ideas and invest, co-invest along with other venture capital funds. Some of the largest venture capital funds in India do take co-investors. Right. We invest along with them in some disruptive ideas. We're examining such enterprises. Some brilliant companies are on the plate. But the focus is always going to be pre-IPO.

Akshara: And about the liquidity part? 

Sivaramakrishnan: Well, the question is: if you're going to be needing to—if you're going to be looking at about 4x, 5x return on investment, 6x, 7x return on investment—what needs to come with a 10-year of investment, right? It's not going to happen in a matter of two or three years. We do have a public market fund in the form of PMS where we invest in public market and exit can happen at any point in time, but the larger bastion of opportunity comes with a bill of liquidity too. One needs to digest this illiquidity in order to generate larger returns. Right? Illiquidity is a price that we pay to generate larger returns. Now how long is this illiquidity going to be? It's going to be probably for a period of about 2 to 3 years because that's going to be the time for which you're going to be locked up with at least a few enterprises and generate the return to the investors. Or you know, we may recycle once again, but in most likely case, we may return to the investor in about two and a half years time from now. Given that, I think an investor needs to prepare himself for a 5-year of staying invested.

Akshara: Okay. So if an investor coming today to BTF fund, you should have a mindset of lock-in of five years.

Sivaramakrishnan: I think that's a period that one should reasonably expect to be able to grow and multiply money. Right? That's true.

Akshara: And you know, all this by talking about valuation—so for the benefit of the investors now, valuation in public markets are known because the prices are booked and can see and everything handy. But in unlisted space, this is not the case. So how should an investor look into value of such investments?

Sivaramakrishnan: First of all, investors don't need to value that because as professional fund managers, we value that. Right? So we need to understand that in the private market space—which is the pre-IPO that we're talking about—private market is a very large market. As I said, talking about pre-IPO, as I said, we will always be investing at a deep discount to the public market valuation in that particular sector, right. So give an example: we invested in a solar cell company. Similar enterprises quote at about 20 times of earnings, 18 times of earnings. We got invested at about 12 times of earnings. It comes at a discount of as much as about 40%, 50% to public market valuation—50-60% of public market valuations. We're investing in a defense company that's roughly about 10 times of earnings that we are investing in, right? While when it goes public, you can possibly quote 50-60 times of earnings. So that's a discount which you're going to be investing.

When we understand that when you find value at a point when it is not discovered, it can definitely be found at a significant discount to public market. How much of discount? What could be the valuation is something that is connected to the respective enterprise, their founders and business model, and particularly the industry. It'll vary widely. But to sum it up, can take one thumb rule: there's absolutely no point in investing at the same valuation in pre-IPO at the valuation at which similar companies exist in the public market. No point at all. Right? There should be differentiation. And I'll add one more important point here.

We should note that if you go into the global markets such as the US market, right? What are the kind of enterprises that have got listed in the last couple of years? SpaceX—the most exciting thing that got listed recently, right? And go back, you know, kind of companies got listed—they're all in either biotechnology, electric vehicles, or they have been artificial intelligence, deep technology, something like data center, so on and so forth. Right? But in India, what are the companies that got listed in the last 3 to 4 years? There have been companies that produce steel, cement companies, companies that sell merchandise, companies that produce footwear—hardcore manufacturing enterprises, forging enterprises. Of course there are some use cases for AI, there are such companies that got listed. But what I'm trying to tell you is that there are so many old economy companies in India that got listed in the last 3 to 5 years, and there are so many more waiting in the wings to get listed—old economy companies.

Now note this important find actually: it's not about finding these old economy companies, but the old economy enterprises which have a new way of doing business—technology-enabled. Now when you talk about defense, right? Until 2019, India—you know, we were early investors in defense in 2019. We invested in Hindustan Aeronautics, companies like Data Patterns, right? Zen Technologies, bunch of other companies which multiplied capital about anywhere between three times to seven times in the last 7 years or so, right? Probably seen about 8-10 times multiplication of capital as well in defense companies. Now in the first set of defense companies that came up in India, they were largely manufacturers but not technology solution providers. Right? Now in the aftermath of Operation Sindur, the Indian government is focusing so much on technology, right? You have drones that are hitting buildings. Go look at West Asia and know how are they defending the drones? Drones coming at a cost of each drone is costing about let's say $20,000. Now they're sending a million dollar anti-drone to defend a $20,000 drone. Okay, you see the point? Even when there was this operation happening when drones fell on our drone doors, right? We were sending anti-drones or missiles costing a million dollar to defend assets against a drone costing Chinese drone costing only $20,000. You cannot sustain the war. Economics of war cannot work like this. You need anti-drones to be produced at $100. You need anti-drones to be produced at $200 to sustain ourselves against drones costing $20,000. You see the point? Which means technology has to go up substantially.

Now since the last two years, India has focused exceedingly well on producing commercially viable technology companies. Take the case of defense. These are all focus areas of the fund—defense, aerospace, precision engineering. These are all brilliant opportunities. There are phenomenal enterprises out there. There are so many such enterprises waiting out there for listing in the next two to three years. Believe it or not, you'll find about at least 15 to 20 companies belonging to defense, aerospace, and precision engineering getting listed in the next two to three years. At least 15 to 20 companies if not anything more. If at all we can participate in about five of them, right? Our wealth will be made.

Akshara: Okay. So the three sectors that you're very much bullish about is precision engineering, aerospace, and defense.

Sivaramakrishnan: Yeah. So these are three primary sectors, and we would like to focus on other sectors which are leveraging on deep technology but providing commercially viable solution. For example, medical devices. 95% of medical devices used in India are not produced in India. Isn't it? Do you have X-rays produced in India? Do you have MRIs produced in India? Every man walking on the streets using MRI and X-ray—but none of them is produced in India. What a beautiful state of affairs over here. There's a huge market out here, but we just started producing MRIs and X-rays in India, right? So medical device is an area of opportunity.

Talking about aerospace, right? It's a $280 billion market globally. $280 billion market. You know what India's share in the global market is? One and a half percentage. The share of US and Europe is 85%. Now China doesn't have a major share. They want to shift a significant part of the production from Europe into India over the next 3 to 5 years. So aerospace as a sector—right? Addressing aerospace components, the needs of aerospace components with companies such as Boeing and Airbus—right? The sector itself is growing at about 20% plus. The sector itself is growing at 20% plus. If you find an enterprise that can grow at 2x or 3x of the industry's growth rate, you get the job done. Right? So aerospace is a very large opportunity in India. Now India's market share is only one and a half percentage as I said. Now this is likely to go up to about 6 to 7%—that is a quadruple from where it is today for the next 5 years or so, five to six years timeframe, right? So if a sector can grow by about 20% plus for the next 5 years, that should be the sector that we should be participating in, right?

So we'll be focusing on defense. Of course, we know the defense story as is happening today. Again defense—you know, we need to go very deep to understand what defense is, right? We don't want to be investing in a defense forging company. Okay? Like industry—we dissect the difference into about five components which include sectors such as loitering munitions, right? Anti-drones. People ask us would you invest in a drone company? The answer is plain no. Right? There are about 6,000 defense companies in India—6,000 drone companies in India, right? So we would like to focus on anti-drones rather than focusing on drones itself. How many anti-drone companies are there in India? There aren't many. The anti-drone market will explode in India because India will have anti-drone facilities put up on stock exchanges, cinema theaters, malls coming up in the years to come—next 3 to 4 years. If any of these large public places are going to be attacked by drones, how is the prevention going to happen? Unless they're going to have anti-drones fixed out there, right? Ports and airports will have anti-drones. The market size is going to be very, very large out there, right? So again, subset of defense—we would like to focus on certain subsets of defense: loitering munitions, anti-drones, right? Autonomous vehicles, artificial intelligence-driven capabilities—very specific focused area.

So sum it up: Defense, aerospace, precision engineering, medical devices, specialty healthcare, which includes oncology, eye care. Okay? Right? If you have a problem with eyes, you don't go to Apollo, you go to Sankara. Right? True. Therefore, you know, you don't go to multi-specialty—there are diadem and multi-specialty hospitals—but the one that is going to survive and grow is specialty healthcare. Problems such as cancer—eye care unfortunately is only going to grow in India. All of us are doing our children are doing homework only through mobile and pads, iPads. Right? Therefore this problem is only going to proliferate.

So therefore, specialty healthcare. And the only other segment outside of these segments of manufacturing delivery of high-quality services—one particular product segment which we like to focus on is Uber-Luxury consumption. Uber-Luxury consumption. Okay? What does it mean? Now if you're going to be buying basic products of living which is FMCG, right? That's sustenance. And above that is premiumization. Yes, right. But there is one segment above that. Let's say for example, somebody needs to travel to Mumbai—he's going to take an economy flight, right? Today that is actually one step above air travel—one step above the railway travel, right? That's also premiumization. But one step above that is traveling by business class. But there's one leg above that, which is private jet. Exactly. That's a market. So we would like to focus on the Uber-Luxury consumption because this segment will never be hurt by any sort of tariffs—whatever Trump's tantrums are, whatever happens around in the globe—this segment will not be disrupted.

Akshara: Take two examples on that segment. 

Sivaramakrishnan: What does it stand for? This is a segment of consumption that's not going to be disrupted or hurt by any vicissitudes in the economy, right? No recession, no stagnation, no stagflation. These consumers are well above that. For those ones who are traveling by private jet, do you think they'll come back to business class if there is a problem? They wouldn't have any problem at all. Right? Who are these kind of consumers? Take the case of Bollywood stars—they have to travel by private jet, right? Take the case of chairmen of companies. Take the case of big personalities in the Indian cinema ecosystem, right? They are all the people who consume.

Now the most interesting part is before answering—two examples, right? To give an example of this, very interesting statistics. Do you travel by vacation actually? Go for vacation once in a year or something like that. Now I guess in your family, since you yourself very young, there wouldn't be ones who are younger than yourself. But if you're finding somebody at the age range of mid-40s, right? You definitely have teens in family. When people go on vacation, families go on vacation—you know who decides the flights? Our generation people generally see—we belong to Gen Z? Yeah, kind of. It's the Gen Z that decides.

Now look at it this way. The father who has been struggling and made his career, built from scratch something—he has gone through all the struggles. But would the Gen Z be aware of it? Of course they are aware of it. It's not that they're bad—they're aware of it—but they don't feel the struggle inside themselves. Therefore the father is okay to have his food at a mess, sleep in a normal lodge or hotel. Right? He would have probably started the career when they stayed in a railway station, stayed in a lodge nearby. But the son, not really actually. 

Akshara: I can completely resonate through this—the four-star hotel minimum, right. Sivaramakrishnan:So the lifestyle standards have changed substantially.

Now the most interesting part of this with these ultra-HNI families—the ones who take a call on what to consume on Zomato, Swiggy, right? Or ice creams or travel, vacation, so on and so forth—is the Gen Z. And the Gen Z wants brands—not only that, Gen Z wants experiences in life. They want to make memories, create memories. Right? Now they're willing to pay for it. Which means that the kind of expenditure that they're incurring to create memories is substantially high. You know what kind of growth this segment is seeing? FMCG in volume terms is growing at about 7 to 8%, 8 to 9%. FMCG volume—Hindustan Unilever, Dabur—and Titan is trying to grow its volume at around 15 to 20%, is trying to do some work very hard to do that. But this particular segment's growth rate—in terms of not volume but in terms of value. Can you guess what could be the growth rate in this segment? 25-30? As per Nielsen report, it's growing at 74 percentage brand. 74. Yeah. This is the emergence of the Uber-Luxury consumer in India. They buy the best of handbags. What do you buy—the best of handbags in India? Do you buy imported handbags? If you do, you belong to the segment, right? A kind of see—you're getting the knocking at the doors of the segment. So, this is the Uber-Luxury consumption all over in India, right?

If you're going to be tracking this segment, coming to examples—we did invest in a pre-IPO of an airline company, private jet company before it got listed. We've seen so far about 60 to 70% growth in price from which we invested it to what it is today. Right? About 50 to 60% in a matter of about probably about 6 months' time, 6 to 9 months' time. It's not bad. It's not a bad return at all. But we're still holding on because we still find a huge upside left in the opportunity.

Therefore, private jet is a case and example. To give a case and example to understand in the public markets, right? To make a sense of what I'm talking about, let's take two examples. Right? The first one could be like of Nykaa, right? Women—somebody—one of the management members of the company told me they're finding great consumers emerging out of villages. Okay? Right? Women living in villages buying imported confectionary—that's where India is today. Right? Nykaa is a classical case. Another case inside could be let's say Ethos Watch, right? Or Titan selling some higher-end watches, right? These are all classical cases of Uber-Luxury consumption. Now this is the segment that we would like to target.

I would used to joke—I mean, I wish, I wish, and pray that India should grow at every point—that the substratum of the society should also grow significantly—is what I wish and pray for. Having said that, if you have to make money in India and doing business in India, where should you be? You should be targeting the Uber-Luxury segment. You should be producing articles or producing products and services that are going to be consumed by the Uber-Luxury segment or the luxury segment and not by the substratum of the society. If you're going to be attracting this particular segment of the society, there's no way you can lose money unless we are extremely stupid.

Akshara: Good. When you say this particular segment is going at 74%—exactly that's huge. But on the other hand, on the consumption front, how many of them are really able to afford such things?

 See, of course, you know, on a middle-class front today, of course the change of middle class has been different—middle class have changed significantly. But just to create experience, people can afford it once or twice but not more than that. Like of course you can't compare myself with a Bollywood celebrity—you can afford it multiple times, but I can afford only one time.

Sivaramakrishnan: So actually I see that you are able to travel on vacation for twice in a year and you would like to travel for four times in a year, right? Four or five times a year. I see that in your question that you're asking. [Laughter]

 But look at it this way—how many people in Bangalore have their second homes in Hosur or elsewhere in the hills, right? They travel out during the weekends—don't you do that? Of course, I'm sure the viewers will understand what I'm saying. People in Mumbai, right? Have their homes in Mumbai and they travel to Lonavala sometimes during the weekend, right? The second home is out there, right? This is pretty common today. In fact, taking a vacation for 2-3 days off to Maldives or Andaman or Kashmir has become like traveling from Mumbai to Pune or Chennai to somewhere—as simple as that. Such is the state of affairs today, right? Therefore, you're talking about a middle-class segment. I'm not talking about the middle-class segment, right? I'm talking about the community—it's more in the middle class now. You're right—so this is mass affluent consumption. It's a fantastic segment to talk about. I'm not saying that the segment is bad—certainly not.

Now the key to investment is something like this, Akshara. Now there are many ways to make money, but to make the most of what you can actually, you need to focus on two objectives. The first goal should be to maximize margin of safety, right? And maximize the number of hits—or rather minimize the number of misses. You see the point—increase the margin of safety substantial point from which failure is almost looks impossible. Right? And number two would be to minimize the losses and minimize the number of misses. Right? If you have to do that, then look at the segment of particular investment case. Let's say talk about consumption basket. Right? Which segment will definitely consume come what may, right? And which segment will only consume all the more, and where is the maximum highest growth rate possible? If you got a segment that is growing at let's say 50% plus in the consumption landscape, then why should you look at a segment that is growing only at 15% in the consumption landscape? Slice and dice it—understand where the growth is.

I talked about defense, right? In the defense landscape, you would like to focus on let's say loitering munitions, we like to focus on anti-drones because that segment is growing at 50% plus while the regular forging segment does grow but it's growing at probably 15%. Deep technology within defense is growing at 24% per annum on records. 24% per annum—deep tech segment in defense. The industry growth rate is 24%. But if you find visionary entrepreneurs, brilliant business cases, brilliant business models, why wouldn't they grow at 3x of the growth rate of the industry itself, right? That's what you need to find. That's where you minimize the losses, minimize the possibility of losing money, and maximize the margin of safety.

Akshara: So you've spoken so much about that segment. So how do you find companies in that, and if you could explain the framework of it?

Sivaramakrishnan: That's the most interesting part, Akshara. When we realize that a very large set of opportunities in India exist and exist pre-IPO among enterprises that are going to get listed, right? There are hundreds in India—the number of small and medium enterprises—leave out the small enterprise, the medium enterprises run into lakhs across segments. There are so many such companies that need to be discovered. Then the question arises as to how do you find such enterprises?

Let's take the analogy of Bajaj Finance, right? If one were to invest in Bajaj Finance today, it's pretty simple—got all the numbers—but you don't make as much money today as you would have made 20 years earlier. You made about 200x in 20 years, right? Then you can't make such money today. But how do you identify Bajaj Finance 20 years ago when these numbers did not exist, these ratios were not there, these profits were not there? Still identify Bajaj Finance 20 years ago. How do you do that? That's the moot question to ask. That's a question that we asked ourselves. If you can find answer to this as to how to find Bajaj Finance in 2003, then we can find more and more of Bajaj Finance and HDFC Banks right at the point when they're going to be taking off.

Now how do you discover that? There is one single principle. If you look at technical analysis in the stock markets, there is this principle that history will repeat itself—that's a foundation principle of technical analysis. Likewise, in fundamental analysis also, the common principle is that history will keep repeating itself. Therefore, we started studying history—students of industry between 2003 and 2024. We took out all those companies that multiplied by more than 20 times in 20 years' timeframe. More than 20 times in 20 years' timeframe—and there are companies that multiplied 100 times also. Right? We started when we wrote down the names—we knew that when you study the reasons why they multiplied, there should be some common factors emerging out of it. Logical, isn't it? We started listing out. But the most amazing or rather the interesting part was that we found that there were only four reasons that were common writ across all such enterprises—only four factors. There are certain companies that had about six to seven factors, but they weren't there in other companies. But these four factors were write across every single company that multiplied more than 20 times in the last 20 years.

What are those four factors? Now we took out those four factors and made a framework out of it. It is with these four factors—when these four factors can get 100 companies to multiply—using these four factors as a lens, we can also find such enterprises that are going to be multiplying in the next 10 years ahead. Right? It is these four factors. What are they?

Number one: All these companies were founded by visionary entrepreneurs. Okay. Now who are visionary entrepreneurs? One may qualify to be visionary in your eyes but may not be in mine. So there should be definition of a visionary entrepreneur. Right? We found that visionary entrepreneurs had these traits: Number two—what he saw, others could not see. He could see something different which others could not see, right? That's why he constructed those enterprises. But the interesting part was just not that what others saw he could not see. Okay? You see the point—he what others saw he could not see because if he also saw what others saw, he would have done only that—been one on the ground. But he saw something else others did not see, and he couldn't see what others saw. He was very different. Right? This is the way—and people called him crazy. Okay. People called them stupid. But that's the starting point of entrepreneurship—being crazy, to be blunt and as blunt as that.

Number three, you know, they were fearless. They're willing to throw everything that they had to chase their dreams. Number four, very high level of integrity. Very high level of integrity—you know, honesty and sincerity, integrity are the fundamental factors of their success. This is a visionary entrepreneur. But the problem happens when this visionary entrepreneur is playing in an industry which is not fast growing. Let's say for example, the visionary entrepreneur has created an enterprise in textile industry. The textile industry is still a good industry to be in, but how much of creativity can you employ in textile? At best case, he could put up let's say thousand more spindles, 10,000 more spindles, but you cannot create something new out there—it's all existing, right? It's all out there. You cannot create something altogether new. So the application of creativity is relatively lesser in many industries. It's only in few industries that you can do something new, do something different. It's those fast-growing industries. But these fast-growing industries change from time to time. For example, if one had to be in a fast-growing industry, one should succeed. So being in the right industry solves 50% of the problem. If you're going to be in a tailwind-backed industry, if you're going to be investing in a tailwind-backed industry—hugely tail-backed industry—50% of the investment problem gets solved. You most likely will not lose money, right? But the question is, which is a tailwind-backed industry? If this keeps changing—20 years ago, somebody started a software company, they would have most likely succeeded. But if somebody had to be starting a software company today, it's so suicidal, right? So today if somebody had to be starting a data center, probably they will succeed. So it keeps changing from time to time.

Then the question arises as to the industry goes through a cycle actually—it's like a cycle that starts and goes up and then flattens out, then probably peaks out and then starts coming down. Software industry keeps coming down, right? Then the question is: every industry is going through a cycle. Which point in time do you invest in this industry? There's nothing great or bad about the industry, but the question is which point in time do you get into that particular industry—is the question. Right? Do you invest here or do you invest when it comes down? You have to be investing when it takes off, right? But how do you know which industry takes off? Then you need to know what is the trigger for the takeoff. If you know what the triggers are for the takeoff, then you can find that industry. Correct. And what is the trigger for takeoff is  an important question that we asked ourselves.

This took us a lot of time—I'm talking about a research project that took about 2 years to complete. Right? We did it for 2 years. In 2025 was when we completed the project. Upon completing, we started the fund, and we have been investing in private markets for quite some time, but we evolved a framework. When you have to manage large-scale public money, right? We definitely need a framework to do that. We're going to be investing about 2,000 crores of capital between 2026 and so, in which case we need to have a framework.

Now, how do you find which industry is going to take off? Right? This is the point—most important point. It was kind of a revelation for us when we found that across all industries between 2000 and 2025, there are so many industries that got triggered, scaled up, and then flattened out and fell down. Right? But we found that there was one particular triggering point which is common across all these industries. There's no takeoff that happened without this particular trigger point. You know guess what it is? Guess what it could be? 

 Akshara: A disruption to that industry? 

Sivaramakrishnan: Yes—disruption to that industry. What would have caused the disruption? Disruption is the result, but what would be the cause?

Akshara: A new innovation that he has brought?

Sivaramakrishnan: Yes. But what could trigger that innovation?

Akshara: His mindset or his or her thought process towards that particular vision?

Sivaramakrishnan: Fantastic. But there should be some trigger point. The biggest trigger was a paradigm shift in government policy. Government policy. Every single occasion industry got triggered into a big growth cycle. The only trigger point was a paradigm shift in government policy.

Can cite so many examples. People say that software industry grows significantly because there is no government intervention—that's what generally the point that is ascribed to growth of software industry. But it's not true because of the fact that it is one case where for 15 long years there was zero income tax for software industry. Can you cite any such case, such examples? But in 1998, if I remember it right, until 2012 or 13, there was no income tax for software industry. If every other industry pays 30% tax, this industry paid 0% tax. Meaning which the entire corpus of tax that got generated will not be paid and recycled back into the same business. Take data center tax, right? Solar incentives, PLI incentives, right? Can keep counting them. These are all not incremental changes in government policy but paradigm shifts in government policy that triggered such a takeoff for many of these industries.

Now government policy should be backed by structural demand growth, right? And then that particular industry should not be disrupted—as you said, should not be disrupted in the next two years. Take the case of payments: if you go walk on the streets of India, even a lady selling coconut water is asking you to pay by Google Pay. Right? Now where is India versus the US—what a change we've seen! It's UPI-driven, right? But the problem is this industry is prone to huge disruption. Therefore, we don't want to be part of an industry though it's triggered by government paradigm shift in government policy. We don't want to be part of the industry if it's going to be disrupted or likely to be disrupted in the next two years. So it should not be disrupted in the next two years, backed by structural demand shift, and importantly paradigm shift in government policy where we would like to focus—just see what the government wants to do for the next two to three years. Just focus on that. And another important factor for the industry's takeoff is geopolitical realignment. India should be the focus of this industry. Right? So this is all about industry.

Therefore, if a visionary entrepreneur is part of a fast-growing industry—the industry itself is growing at 20%—then our entrepreneur sitting there can he grow his enterprise by two times of that industry's growth rate, three times of that industry's growth rate. That is the enterprise where you would like to invest your money. Right? So visionary entrepreneur in a fast-growing industry—but still that's not sufficient because still prone to failure if the entrepreneur is the one who is also selling coffee and tea. The sense is the strategist is also the executionist. You would always like to see a professional management running the company, right? An entrepreneur can discover ideas, can set the ground, right? Can focus on the strategy. But there should definitely be professionals to implement the strategy. That's where you'd like to see a CFO in the company, right? There are so many enterprises, brilliant entrepreneurs, but if it's not backed up by professional management, we wouldn't want to invest. Typically, when you invest, we would like to see a CFO there. There's another reason why you would like to see a CFO. Typically, a chartered accountant with about 25 years of experience comes to run the finances of a company. He wouldn't want to do anything murky. He wouldn't want to do something wrong because he's not only throwing his career at risk. Therefore having such a professional inside the system gives us a lot of security from the corporate governance point of view. Right?

So therefore: visionary entrepreneur in a fast-growing industry backed by professionals.

Number four: solving critical problems in the society. Right? There are two kinds of business actually. One that solves problems, other creates a need. For example, take Facebook. Take WhatsApp. Life existed before Facebook, right? We all lived before Facebook—don't you remember? Without Facebook, without WhatsApp, we lived, we were happy. So we from Instagram generation see—we become Instagram generation because Instagram created that need. Right? 5 years later probably you'll forget Instagram—that's something called Pentagram that might come up that will become the need. Therefore creating a need is one aspect of doing business, but that requires so much of capital. Probably Reliance Jio can do that, a Meta can do that, but it's very hard for everybody else. We wouldn't want to focus on creating a need, but we'd like to look at enterprises that solve a problem. Because when you look at enterprise that solves a problem, the problem already exists. The solution is there. So when you bring the solution close to the problem, it's like a magnet tagging with the iron—the company can grow much faster, easily, right? You don't need so much more capital.

Therefore: visionary entrepreneur in a fast-growing industry backed by professional management solving critical problems in the society. These are the four pillars that we employ to discover ideas. But at the same time, these ideas should be at reasonable value. What is reasonable value? Deep discounts to public market valuations. If all of this come together, that's the enterprise we would like to go and park our money with.

Akshara: So how many such companies or enterprises that you have in your fund? Because everything coming together—that's a difficult part.

Sivaramakrishnan: That's the difficult part, definitely. Right? So if you evaluate about 100 ideas—100 companies which are good ideas, good companies, right? I'm not talking about ideas as in startups—100 such opportunities. We probably end up finding about five or 10 of them fitting into this particular thesis because in many enterprises, it may not be part of the fast-growing industry. For example, we see in many companies part of let's say textile, steel, forging, distribution companies—they are good models, no doubt about it. But you will not see this hyper-scalable potential out there, right? And sustainability of the business will also be there. If again you don't find enterprises that solve critical problems, what happens is that they get disrupted. If they solve critical problems, then the moat gets created. It provides sustainability for the company. Right? So all these aspects should be there.

Therefore, the typical way it works—we have seen is this: see 200 companies, shortlist maybe 100 of them, and start working on them. Probably end up with 50, 30 of them, and do due diligence in about 15 of them, choose five to 10 of them. Typically, this is the funnel the way it has worked so far. Right? And how many companies? Well, we'd like to see about 15 companies in the portfolio. Okay? Roll them over, find exits in about one and a half years, then possibly do another 10 to 15 enterprises in the second cycle. Probably return some of the funds back to the investor and go with the rest of the funds to see one more cycle.

I think there is a lot of value to be created. There are so many such enterprises actually—trust me, there are so many brilliant entrepreneurs. We're not falling short of enterprises at all. We could see that because a lot of companies are coming into IPO, but after IPO the performance is not great. You need to differentiate. We do so much of work before that—I think we should be able to differentiate.

Akshara: So for investors coming to this fund—since it's an invitation to apply to this—what is the expected IRR that they should come with the mindset of?

Sivaramakrishnan: I think public markets can deliver—what kind of IRR can public markets deliver? Large caps potentially deliver about 12% to 18%. And midcap small caps can deliver about 15% to 18% per annum. Put it this way—then the way we invest, definitely one should look at returns of more than 18% per annum. Right? How much can it go up to? I don't want to put a figure there because it's not appropriate.

But let me tell you what we look at. Simply put: if 100 can become 250 in about 2 and a half years' time—2 to 2 and a half years' time—in one cycle of investing. And the second cycle of investing again—250 roll it over for one more cycle to see about two and a half times of 250, which takes you about 150? Right? 250 becoming five, five becomes on and off. So let's say put it this way: 5x in 5 years is what we look at. That probably—if we when we do that—we'll end up with an IRR of somewhere close to 30%. Okay? I think that's a pretty good number. You don't want to set an expectation at 30% or 40%, right? Would definitely like to say that investors should expect definitely better returns than public markets, right? I think that's a basic requirement. Then why else would somebody come to this particular lock-in period, right? 

Akshara: Definitely one should see returns of much more than public markets. When you see that, people should expect something more than public markets.

 Now you already have in-house PMS. If you could talk about the returns—it has of course in recent times it has outperformed, but if you see since inception it is a bit underperformance compared to benchmark. So why do you see that?

Sivaramakrishnan: Well, Metamorphosis is the name of the firm. We invest again in transformative enterprises—the public markets. Between 2022 and 2024, we outperformed the markets by about close to about 10%. Right? In the first four months of 2025, we had a bout of underperformance and we had certain decisions made by people that are part of the fund during this period, right? During the specific four to five months, there was a deviation from our ideology, from our thesis that happened during this four months that resulted in a dip in returns. Until that point in time, we were doing sitting with—and those four to five months we saw a dip in returns. Since May 2025 until date, we have outperformed the market once again quite significantly. We see ourselves continuing the outperformance. The idea is to deliver somewhere between 5% to probably 12% outperformance over the benchmark index—which is BSE 500—and we have done that in the last one year. I think we'll continue to do that in the year ahead.

Akshara: So if I could ask this one last question—the company that you have exited an IPO, and after IPO if it gets attractive, do you think the PMS would catch that?

Sivaramakrishnan: Why wouldn't that should happen? You look at the entire value cycle of a company, right? For an investor, if you find that company pre-IPO, travel with them until IPO and travel with them for probably a year or so post-IPO with Bharat Transformation Fund and we still find a great opportunity—but not as much as we saw in Bharat Transformation—let's say 20% plus compounding, not 40% plus compounding. Typically we look at 40% plus compounding—I'm not setting an expectation here. We typically look at 40% plus compounding in Bharat Transformation Fund. If you don't see that kind of opportunity but still see some 25% plus compounding happening, why shouldn't the PMS not invest? The great entrepreneur, the visionary entrepreneur, the story still continues, right? So ultimately we travel with the entrepreneur—travel with that brilliant entrepreneur, the brilliant business model—for a very longish period of time, 10-15 years timeframe, to create enormous wealth.

In my own learning experience of staying invested in the market for the last 25 years, I have seen—not only myself, our team members have come with a lot of experience—we have seen money growing about 50 times, 100 times our investments. In the last 10 years, we have grown money by—we've seen money growing by about nine times in the last 11 years of close to 12 years of our being part of the investment world. Right? So it's all about staying invested. Sometimes you make changes in investments because the valuations have peaked out or because the growth has petered out, right? Those are changes you got to be making because you find better opportunities elsewhere. But the important thing is to stay there, stay in the game, and that multiplies money. A simple formula for multiplication, isn't it?

Akshara: So this one last question—so if you have money, let's say one crore to 1 crore. So what fund would you put in now? Because you have PMS, you have this. So if you were to put in 1 crore your own money?

Sivaramakrishnan: If I were to put in myself—well, I would definitely invest in Bharat Transformation Fund myself because I come with a discount? And today 1 crore—I don't need this 1 crore in the next 5 years. But let me answer it for a general common investor. Right? The question that we will ask an investor if he comes with 1 crore to invest in Bharat Transformation—or for that matter 10 crores also in Bharat Transformation Fund—is this point: would you need these funds in the next 5 to 7 years? We wouldn't take 7 years but maybe 5 years. If you think that you're going to be investing 100% of your net worth or financial net worth in a lock-in, I think that's not appropriate. If you're going to be having about 5 crores of investable funds, deploying 20% of the funds in BFT with 5 years locking is no problem at all. Right? So long as you don't need that 1 crore—so 20% of your financial net worth can be definitely deployed, but not 90% of your financial net worth. That could probably be deployed in the public markets, in PMS, in mutual funds—there's a host of other products, right? But the lock-in kind of products such as this—I think one should deploy 20 to 25% of financial net worth, not more than that.

And one should do that because India is at a point that if you don't do that today, when are you going to do that? 

Akshara: You know, the biggest wealth creation has moved from the traditional investing of real estate, gold, and then to listed equities. If I know—if I'm going to ask my father why you haven't invested in listed equities—even my child is going to ask me why haven't you invested in unlisted? You don't let them ask this question. Right? Definitely I wouldn't. So that is how the evolution of wealth creation is happening. So with that, I think we need to close the session. And it was a very interesting conversation—I think more about the Bharat Transformation Fund and also about how an investor should see it, and also about how investors should look into the unlisted space and about the valuation and you spoke a lot about it. I think it's a very interesting conversation that we had.

Sivaramakrishnan: Actually, you made me speak a lot. I don't know if it's going to be boring or interesting for the viewers, but it was a lovely conversation today.

Akshara: It is definitely interesting one. It is more of knowledge that you have shared with us. Thanks a lot for that.

Sivaramakrishnan: Thank you so much, Akshara. Thanks for having me here.