PE firms scout for in-house honchos
PE players that have found companies to invest in, are now on the look-out for dynamic, 'in-house CEOs'.
By Amanpreet Singh and Vinod Mahanta, TNN |
NEW DELHI: First, you heard of corporate honchos heading for private equity (PE) firms. Now you know what they are up to. “Baring Private Equity Partners requires the following personnel to fill positions both in-house and in investee companies,” goes an advertisement. In short, PE players that have found companies to invest in, are now on the look-out for dynamic, experienced ‘in-house CEOs’ to place in key leadership positions.
| WIN WIN SITUATION |
| • Great ‘in-house’ CEOs make private equity players more attractive to entrepreneurs seeking funds. • CEOs on board, meanwhile, get to experience the deal flow, execute funds and steer diverse companies. |
Already a globally accepted practice, this trend has made its way into India as PE firms suss out ways to set themselves apart from the competition. And the CEOs on board get to experience the deal flow, execute the funds and steer diverse companies. Call it the new ICS - Indian CEOs Service.
Recently, Actis placed Nokia’s ex-MD Sanjeev Sharma in Phoenix Lamps, while Softbank Asia Infrastructure Fund (SAIF Partners) placed Sundeep Malhotra, former executive VP, PepsiCo Foods, in TV18’s home-shopping division.
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Similarly, Carlyle placed ex-CFO and chief risk officer at Infosys’ Progeon, Ramesh Kamath, as the CFO of QuEST Global. IDFC placed NetKraft’s ex-CEO Anand Sudarshan in Manipal Health Systems along with Narayana Swamy as the CFO. And there’s more where they’re coming from. Most PE firms have ‘cadre’ CEOs waiting in their ranks — Actis has Rajeev Kaul who quit Microsoft and Baring PE has Ajit Singh Karan who joined from All-Out. In fact, some head-hunters claim to be working in tandem with PE firms to place CEOs in investee companies.
“The founder of the company makes the best CEO, but in some extenuating circumstances when the existing management cannot handle the envisioned growth, we have to place our CEO,” says Rahul Bhasin, managing partner, Baring PE Partners. Baring is in fact on a perpetual hunt for CEOs not only for investee companies, but also to train, mentor and coach home-grown entrepreneurs who run them. “One of our contributions at the start-up stage is also finding the right man to grow and nurture the venture,” says Vibhor Mehra, VP, SAIF Partners.
It’s a win-win deal: Great ‘in house’ CEOs make PE firms more attractive to entrepreneurs seeking funds, and the CEOs keep abreast of the latest as they take up new challenges. In a symbiotic relationship, the CEO, PE firm and the entrepreneur benefit greatly from the exchange of ideas.
In some cases, like that of TV18’s home shopping division, the PE firm was actually involved with the company in the search for a head honcho.
ICICI Venture also made top-level changes in some buyouts like VA TECH, Ranbaxy Fine Chemicals, Tata Infomedia and ACC’s refractory business. According to industry experts, successful exits of PE firms are largely dependent on the person heading the company. And for quite a few PE firms, it is important to have their own man heading operations for reasons of growth, expansion, acquisitions and of course, profits.
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