“We Back Management Teams With Drive, Hunger And Integrity"

Shankar Narayanan, Managing Director and Co-head, Carlyle Asia Growth Partners, drives Carlyle’s growth fund in India with a 360 degree view of Indian business. Here, he talks to Clifford Alvares on his India strategy

How does private equity enhance value creation?
Private equity acts as a catalyst in the transformation of investee companies, and thereby in adding value to India’s economy. In many ways, it is the capital that PE provides that enables a country’s gross domestic product to grow; it also fosters innovation. We provide small- and medium-sized companies access to world-class knowledge and processes.

What role does Carlyle play in India?
The Carlyle Group has an incredible network of strong relationships globally. We harness this power to help our Indian investee companies. We also act as a strong catalyst in the transformation of investees’ businesses. This is one of the greatest strengths of Carlyle.

Could you give an example of how you played the role of a catalyst?
In the engineering services industry, one of our portfolio companies is Cyient. Carlyle made this investment in 2012. We then enabled the company to rebrand itself from Infotech Enterprises to Cyient. Carlyle also re-oriented its service-centric business model to a systems-and-solutions led one.

The Cyient investment case study illustrates how two extremely talented entrepreneurs, with a rare drive, a deep passion and an effective leadership, have been able to create a world-class engineering design services company. Furthermore, a Padma Shri award to one of the founders, Mohan Reddy, and his stewardship as the chairman of NASSCOM are testimony to Carlyle’s bull’s eye decision to invest in Cyient.

How do you assess India’s growth potential?
India’s world-class regulators and its political leadership give Carlyle great confidence to invest in India. At the macro level, India is conducive to absorbing private capital.

Carlyle’s success is attributed to the thoroughness with which it has invested capital from its limited partners. We have the capability and the interest to invest large sums of money in India. The key sectors that interest us are those with a ‘brand and franchise’ value. We are keen to invest in sectors such as retail, healthcare, pharmaceutical, technology and financial services.

How do you create value in investee companies?
We do not possess a ‘magic wand’. We work closely with investee companies’ promoters to enable their growth. Carlyle is an institution that has built a very powerful network of its portfolio companies, its relationships, and its knowledge base.

What are the kinds of deals you typically do?
There are two types of deals we do in the Indian market. One is control, and the other is minority. Typically, in most cases in India, we back management teams with drive, hunger, ingenuity and integrity. We try to support them. We don’t demand investee companies to listen to us or respect us for the capital given to them, but for the power of our ideas and capabilities.