Multiples Alternate Asset Management, the only home-grown, woman-led private equity fund, announced the first close of its third and latest fund at $800 million. The investment company started by former banker Renuka Ramnath and Sudhir Variyar had launched an $400 million investment fund in 2009, which was followed by a $550 million fund that was raised in 2015. The National Investment and Infrastructure Fund (NIIF), India’s first sovereign wealth fund, is a key investor in Multiples’ Fund 3.
Ramnath says the key difference between Multiples’ older funds and the latest one is that the company has shifted gears from its "micro-winners strategy" to a sectoral theme that is more macro-oriented, with a specific focus on digital economy and financial inclusion.
The first fund that went active between the years 2011-2014 was during the UPA II regime when the Indian economy was beset with allegations of scams. This led the firm to largely bet on what it saw as individual winners. For example, Multiples invested at least Rs 100 Crore in Chola Mandalam Investment & Finance Co, which provides finance for light commercial vehicles. It saw a 3X exit in two years.
Multiples’ appetite for larger deals continued to grow. If Fund 1 saw Vikram Hospitals as the lone majority transaction, Fund 2 has seen two more such control deals: housing finance company Vastu and HR solutions firm PeopleStrong.
Fund 1 has realised 2.7X returns and is expected to close at 3X basis residual portfolio.
Today, Multiples’ strategy has evolved and is driven by a broader approach, especially in the field of financial inclusion, Ramnath says. This includes investing in areas like micro finance, where, Ramnath says, the firm will soon close on a control deal. "The future of such businesses will be beyond the 20 or 30 cities in which most businesses operate now,” she adds.
Multiples has also developed a proprietary framework called LEL (Leadership Energy Level) for assessing entrepreneurs and leaders. “The choice of an entrepreneur” makes all the difference, even if you get the sector macros and the financial metrics of a business right, says Ramnath. It’s also about getting seasoned talent on board, she adds. The company has employed senior professionals from multinational firms such as TA Associates, Carlyle Group, and KKR, amongst others. Manish Gaur recently switched from Carlyle to join Multiples as managing director.
“If the driving force behind Fund 1 was to establish Multiples as a name in the industry and explain what we stand for, then over time, the focus has changed,” says Nithya Easwaran, managing director at Multiples. "We have deal teams that go deep around four sectors: pharma and healthcare, consumer, financial services and technology. “That’s where our expertise, relationships and talent have developed over the years," she adds.
So what challenges do Ramnath and her team face now and how are they different from what they faced five years ago, given that there is now a flurry of de-conglomeratisation amongst large groups and liquidation of badly-run companies through the Insolvency and Bankruptcy Code?
“Earlier we were looking to consolidate Multiples, build talent and give returns on the fund," Ramnath says. “Today, it’s about how the firm gets to the bigger deals, engage talent that is beyond internal ranks, work with external operating partners. That’s the add-on strategy that we are snapping into place.”