<div>E-commerce companies that will be successful can be classified into two categories. One, that allows penetration in the under penetrated areas, and two, that allows to improve capacity utilisation of idle asset and thereby extract economic value, says <strong>MK Sinha</strong>, managing partner and CEO of IDFC Alternatives, a leading multi-asset class investment manager in the country to BW Businessworld’s <strong>Paramita Chatterjee</strong>. The firm is looking at investment opportunities in areas such as food and agriculture, healthcare, value-added telecom, among others.</div><div> </div><div><strong>Tell us something about your next fund. It is learnt that IDFC Alternatives is in the process of raising $600 million from its two funds. One, PE and the other, a real estate fund.</strong></div><div>As a matter of principle, I cannot share any news pertaining to our fund raising activity. However, having said that, we have three funds under the IDFC umbrella which we have completely exhausted. In fact, not only have we finished deploying the entire capital under these three funds in December 2013, we have also been on an exit mode for the past one-and-a -half years and have focussed on returning capital to our investors. In the next couple of weeks, we will be announcing another large exit after which we will be completing a full investment cycle with a track record of successful exits from the first 2 funds. </div><div> </div><div><strong>What is your overall outlook of the PE industry?</strong></div><div>Currently, there are a lot of interesting opportunities in diverse sectors. While we started as a core infrastructure fund, we have now diversified into making investments in other sectors such as food and agri, healthcare and value-added telecom, among others. To elaborate on this, our fund 1 was focussed on core infra projects, while fund 2 primarily dealt with investments in the infra and infra-enabled sectors. It is the third fund from which we started making investments in social infra sector which also includes some of the sectors that I just mentioned.</div><div> </div><div>Traditionally, infrastructure was one sector that evinced tremendous investor interest. However, in recent times, the number of investments in this space has really fallen. What is your take on that? Also, is that the reason why you have shifted your focus on other conventional sectors?</div><div>Well, there are a few issues in infrastructure that need to be resolved first. In fact, a lot of things are stuck due to regulatory hurdles. Currently, there is not much action in the sector and existing promoters are rather looking to sell their distressed assets. There are no power plants that have come up in the past 3 years. Also, no headway has been made as far as amendments are concerned in the land acquisition bill, even as the new government is doing its bit to push it. Things are over all very slow in this space.</div><div> </div><div><strong>Fund managers seem to be very gung-ho about the new age sectors such as e-commerce that is riding on the domestic consumption story. What is your take on it? Any plans of foraying into this space going forward?</strong></div><div>First, it is absolutely important to understand how to make money. While this is a sector that is witnessing a lot of action, there are lots of e-commerce companies that don’t make any sense in terms of business. However, that is not to say all businesses are bad. As much as 20-30 per cent of ideas are fantastic and going forward, they are the ones that will stand out. E-commerce companies that will be successful can be classified into two categories. One, that allows penetration in the under penetrated areas, and two, that allows to improve capacity utilisation of idle assets and thereby extract economic value. In the next 2-3 years, it will be interesting to see which ones actually succeed.</div><div> </div>
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