Ravi C Adusumalli, general partner and India head, SB Asia Infrastructure Fund, talks about the private equity fund's India operations in an interview with
Venkatachari Jagannathan

Chennai: The burgeoning consumer economy has made India as a prime market for theinvesting community. One of the private equity fund SB Asia Infrastructure Fund (SAIF) Partner has started investing in Indian companies out of its $1 billion corpus. The fund is focused on India, China and South Korea.

"As a firm, we believe in fostering innovation and are looking to invest in growth stage companies with strong management teams that are fiscally responsible. In the last five years, we have strengthened our focus on the Indian market and have put a strong local team in place," says Ravi C Adusumalli, general partner and India head, SAIF Partners.

According to him SAIF Partners make privately negotiated equity or equity-linked investments mainly in technology, media and entertainment, telecom and financial services companies based in the Asia Pacific region.

Thirty-year old Adusumalli is a graduate in economics and government from Cornell. Prior to joining SAIF Partners, he was an associate partner with Mobius Venture Capital, an early stage venture capital firm in the Silicon Valley. He has also worked with Credit Suisse First Boston as an associate and with Wasatch Funds, a mutual fund specialising in small cap and micro cap companies listed on US and international exchanges.

Set up in 2001, the Hong Kong-based SAIF Partners has strategic investments from Softbank Corporation of Japan, and Cisco Systems. Here Adusumalli talks about the funds' investment philosophy. Excerpts.

How much of your corpus has been invested?
We have already invested approximately $600 million. Our investments are not earmarked for specific sectors, but are directly linked to the opportunities that each sector presents. We expect to invest circa 20 per cent of our fund in India.

You have already invested in some Indian companies. Could you give us their names and the total investment made in them? Are the returns from these investments satisfactory?
In India, we have invested in six companies so far - $13 million in Sify.com, a leader in consumer internet access, portals, and enterprise services in India; $10 million in Intelligroup, a global provider of innovative consulting, technology and application management services; another $10 million in MakeMyTrip India Pvt. Ltd, a leading online travel company to finance its India launch; $9 million in VisualSoft Technologies, a global software development firm; $8 million in IL&FS Investsmart Limited, a premier financial services organisation plus helped them introduce their E-Trade; and $22.5 million in Cybernet Software Systems Inc, a US-based business and technology solutions provider specialising in services to enterprises and Independent Software Vendors (ISVs).

What is your investments philosophy?
We believe in fostering innovation and are looking to invest in growth stage companies with strong management teams that are fiscally responsible. We primarily focus on technology, media and entertainment, telecom and financial services companies based in the Asia Pacific region. For instance, all our Indian investments fall into these verticals.

What do you expect from your investments in terms of returns and how long do you stay invested? Do you also accept the demand for staying invested for a minimum lock-in period?
We typically look for at least between three to five times our capital over a period of three to five years. We do not have a minimum period of investment, but we typically target five years. As to the maximum period, we have to return the capital to our investors within ten years. Given our long term horizon, we typically do not have a problem with a lock-in period.

Do you usually demand board representation?
Our differentiator is that the investment and engagement with the companies we invest in, goes beyond the financial investment. We are also involved in the management and growth of these companies. Given this, in most cases, we have representation on the boards of the companies we invest in.

What is your exit policy?
We seek an exit when we feel that the value of our investment has peaked.

Could you compare and contrast the sunrise industries in India that you have identified with those in other Asian countries?
India is a rapidly-growing market and we see immense opportunity in the country. We have identified technology, media and entertainment, telecom and financial services as emerging verticals in the country.

Compared to countries such as China, India is clearly several years behind. However, we are excited about India's potential and remain bullish on India catching up over the next five to10 years.

How do you assist in the business growth of the companies you invest in?
We work closely with the organisations we have invested in to help them network and identify business opportunities with others. For example, in the case of Investsmart, we introduced them to E-Trade and as a result of that, E-Trade made a $35 million investment in the company. Further, E-Trade has provided tremendous operational leverage for Investsmart and we expect this to continue. We also help these companies enhance shareholder value via promotion of good corporate governance and best management practice.