We spent our first night in Delhi with Sudershan Tirumala (“Suds”), a 2010 Tuck graduate currently working as a growth equity investor providing capital to promising Indian companies. We met at the magnificent Punjabi by Nature restaurant just a couple of minutes from our hotel; which, in addition to its succulent food, offers a 2 for 1 happy hour special that became a staple of our Delhi trip. Our conversation focused both on his personal Tuck experiences as well as the nature of the private equity and venture capital industry here in India.
His passion for both Tuck and India was very apparent and inspiring. We all loved hearing about how his Tuck nickname followed him across the world and greatly appreciated the fact that Suds flew in from Mumbai just for our dinner. He described his intense desire for both private equity investing and for the emerging markets, especially India, and his deliberate and thorough methodology for achieving his goal. Recognizing his lack of emerging markets, Suds studied abroad at HEC in Paris and then orchestrated independent study focusing on fundraising of private equity funds which was the first ever private equity at Tuck with a non-Tuck professor as an advisor. He used a targeted but aggressive approach to recruiting, including a broad networking effort, recurring trips to India and successful private equity summer internship.
While listening to Suds rehash his Tuck days, I could not ignore the similarities between his recruiting philosophy and mine. Over the past year and a half I have sorted through a database of over 500 private equity funds and reached out to over 150 as well as performed an independent study for a small private equity fund. This led to a summer internship in London with a private equity fund focused on emerging markets which was a very educational experience for me which I hope to leverage into a full time offer. Overall, his success using this approach was very refreshing.
In addition to Tuck memories, Suds offered fantastic insight into the nature of the private equity market in India.
Overall, I was surprised how similar the industry looks when compared to the US. Similar multiples were used for target investment values, and investors sought similar return characteristics (20-25% IRR) despite what would be perceived as a higher risk environment given the emerging economy. But there were two more similarities that really surprised me. First, Suds mentioned that the majority of growth equity investments are exited by selling to a larger buyout private equity arm as opposed to IPO or to a strategic corporation. Given the relatively young nature of private equity investing in India and the conglomerate nature of family owned businesses, this seemed counterintuitive. What enables this, which is surprise number two, is the amount of leverage used in private equity transactions is similar to that in the US. This is despite significantly higher interest rates (Indian treasury bond is 7% compared to US rate of 2%) and the added interest burden imposed on acquisition targets. In general, myself and my classmates came away very impressed with Suds and the level of sophistication of the private equity industry in India.