 "Mathew Cyriac")
Last week, when Mathew Cyriac and his associates bought out Blakstone’s 40 per cent stake in apparel exporter Gokaldas Exports, which triggered an open offer, the news almost went unreported.
Almost all newspapers missed it. One explanation could be that exchanges were informed on Saturday. Yet, few followed it up on a deal involving a major private equity firm.
The second explanation is neither Blackstone nor Mathew wants to talk about a deal that saw the private equity (PE) firm exit with a big haircut. Cyriac was co-head of Blackstone’s private equity business in India till recently and was also Blackstone’s representative on the board of Gokaldas.
When Business Standard approached him for an interview and this article, he politely declined. ‘‘Unlike some other people who would want to tom-tom about their work, he’s a highly reticent person,’’ says a former colleague who has known him for over two decades.
Cyriac quit Blackstone in February to start his own venture and acquired majority control of Florintree Advisors, a wealth advisory firm based in Mumbai, considered amongst the best portfolio managers.
Founded by his college mate, Chidambaram Palaniappan, a former fund manager from Martin Currie Investment Management in Edinburgh, the firm runs a deep value strategy focused on capital protection.
Since its inception in 2010, Florintree has outperformed the Nifty Index by 34 per cent on an annualised basis till the end of January 2017, the Economic Times said in a report on Cyriac and his plans.
Cyriac has invested in two start-ups: Rs 22 crore in listed firm Palred Technologies which runs a mobile accessories business and Rs 25 crore in Aeries Financial Technologies, which owns CASHe, an app-only lending platform for young professionals.
But he’s not looking to invest more in start-ups. ‘‘These are companies with very less cash burn,’’ says a person close to him. ‘‘He’s looking to invest in mid-caps and public equity.” He may still do the odd-deal with a private firm.
A former colleague familiar with his plans says he doesn’t want to do traditional investment where a PE firm gets actively involved in a company. Instead, he plans to invest in listed firms where the capital can be turned around faster.
"He was doing well. If you are a partner at Blackstone, you would be pretty content. His move to start out on his own shows his entrepreneurial and risk-taking ability. He likes to take risks and enjoys the excitement,’’ says another former colleague. That partly explains the Gokaldas buy.
When news broke that Cyriac is buying out Blackstone in Gokaldas, it surprised many as the PE firm has been trying to exit for many years. Though Cyriac is acquiring 66 per cent for Rs 117 crore in an asset where Blackstone paid Rs 676 crore for 70 per cent, many wondered if he was throwing good money after bad.
Gokaldas was a bad buy for Blackstone. The PE firm bought it at peak valuations, but its fortunes fell sharply with the economic downturn in 2008-09. Gokaldas’ fall has also coincided with Bangladesh’s rise in garment exports, which enjoys duty-free exports to some markets.
"It has made some progress but this is not yet reflected in its financials. It’s a high-risk gamble,” said a person familiar with the deal. Gokaldas reported a loss of Rs 22 crore on revenues of Rs 198 crore for the quarter ended December 2016 against a PAT of Rs 26 crore on revenues of Rs 244 crore in December 2015. The company, in its performance review, has attributed this to loss of business from a key export customer and delays in stabilising operations for a new customer.
Blackstone appointed Amit Dixit and Cyriac as joint heads of the firm’s business in India in December 2013. Blackstone had invested $1.7 billion in 20 deals till then.
While Dixit focused on the firm’s infrastructure portfolio, Cyriac looked after the non-infrastructure deals. ‘‘Initial deals are tough as it takes time to understand the market. It had a couple of blow-ups. But you have to give them credit for the resilience they have showed,’’ says the head of an Asian private equity firm active in India, on Blackstone.
Unlike some PE firms which have scaled down their operations or quit India, Blackstone has stayed put. ‘‘The firm has seen many exits since then, with the quality of the portfolio steadily improving. They may not have had too many 5x-7x kind of exits, but they have made reasonable returns,’’ adds this person.
Cyriac has worked closely with several portfolio companies such as CMS Computers, Sonalika Tractors, and Gokaldas, and made an impact. Blackstone, for instance, has made its best return on CMS Computers, after the business was spun off from the CMS group, and grew riding the growth in banking and ATMs.
Although a workaholic and somewhat reticent, for those who know him, Cyriac is a friend and a confidante. ‘‘He’s very detailed in his approach, and knows things about business that often only the operational managers know about,’’ says Aarti Grover, managing director, CMS Group.
