‘Will invest in firms focused on make in India’

Home-grown True North has been one of the most prolific private equity (PE) funds in terms of investment and exits during the pandemic. In an interview, partner ASHISH BHARGAVA tells Raghavendra Kamath the fund manager is looking to more invest more in the digital space and firms focused on the Make in India theme. Edited excerpts:

Which are the sectors or themes you found attractive in the past 18 months?

Two or three things we are seeing. One big trend is around digitisation. There are many firms born digital or large firms becoming digital. In both cases they need visibility and capital in order to make the transition and a strong value proposition for the customer. That’s one theme running across all the business — whether you take fintech, edtech, or consumer businesses that are born digital. They are of interest and we will look deeply into it.

The second theme impacting a lot of businesses is that the government is pushing the concept of “Make in India”. At one end, we are seeing digital ventures. At the other end we are seeing increasingly more and more domestic manufacturing companies are reducing reliance on imports. I am sure a lot of companies will come up and look to raise capital as they target more and more Indian consumers. In this context also we are well placed not only to give capital but other dimensions of support. Right now we would like to focus on these two areas. The third area I will touch upon and where we have deep experience is corporate partnerships. Sometimes in the long corporate journey, some part of the business may not get enough focus. There private equity can play a big role and we can do that.

What is your take on initial public offerings (IPOS) by digital companies?

The firms hitting the IPO market is a big cause for celebration and congratulations to promoters on starting small but making a huge impact during the journey. The IPO market per se will be a lot more vibrant for them as they become mainstream and public markets will be a good way to raise capital.

What are the challenges you faced during the pandemic in sourcing deals and making exits?

When the pandemic started and we began working from home, it took a bit of time to settle down. I took two to three months to get used to this kind of working. Then we adapted ourselves to the change well but missed the human connection. You can’t gauge what the other person is feeling. No travel brings a lot of flexibility and meetings become efficient. I think we had very few challenges in understanding businesses and investing as young founders are comfortable having online discussion. Even in exits, we did not have serious challenges except that on-site visits were a problem during lockdowns. Though we like it this way, some part of it is “yes”, some part “no”.

Have you seen any decline in returns expected?

“I THINK WE HAD VERY FEW CHALLENGES IN UNDERSTANDING BUSINESSES AND INVESTING AS YOUNG FOUNDERS ARE COMFORTABLE HAVING ONLINE DISCUSSION”

I don’t think so. Liquidity was robust and there was strong demand for good and interesting assets that we were divesting.

Will there be any major change in your portfolio in coming years?

Increasingly, you will see more investment by us in digital firms, investment in Make in India businesses, and collaborations with companies. One thing we realised is for sustained returns, we have to deploy capital.

Are you looking to raise any funds in the near future?

Yes, but the amount, timing and so on will depend on when we fully deploy Fund Six.