Goldman MD sets up consumer-focused Indian private equity fund

Ex-Goldman Sachs MD, Sameer Sain, moves to India to set up a financial services company with a consumer centric edge.
Ex-Goldman Sachs MD, Sameer Sain, was formerly co-head of wealth management for Europe, Middle East and Africa at the US firm, as well as head of the special investments group in London. He recently moved to Mumbai as CEO of Future Capital Holdings (FCH), the financial services arm of Pantaloon Retail.

What attracted you to the Pantaloon Retail group?

After 11 years with Goldman Sachs at various international offices, I had a strong personal desire to return to India. I also wanted to do something entrepreneurial and build a business in the financial services area. IÆve known Kishore Biyani, (promoter of IndiaÆs largest retailing chain Pantaloon Retail) for 20 years. We discussed his vision for the country and travelled across India together. The country is changing dramatically. Kishore wanted to build a finance-led business leveraging his success in retail and his pulse on the Indian consumer. I share this vision and passion.

What's the ownership structure of FCH?

FCH is majority-owned by the Pantaloon Group. Other partners include myself and Alok Oberoi, an ex-Goldman Sachs partner, who's currently running ACP Partners in London. There's also a couple of other investors. I can't share financial data with you at this juncture, but we intend to strongly capitalize FCH and scale its various businesses.

What type of investors are you in dialogue with?

Investors who can enhance our value proposition, as well as provide capital. This might comprise an international consumer company, or a retail-oriented family who can provide insight and possibly international distribution capabilities for our portfolio of Indian companies.

What kinds of businesses will FCH invest in?

FCH is a holding company and so far we have three business lines up and running.

In the real estate sector we have two funds. The first is called Kshitij and we raised $80 million for it in 2005. It's now fully deployed. We also have a second fund called Horizon ($300 million), which we're planning to close this month.

In the private equity division we have Indivision India Partners Fund. We're currently raising money for this fund and targetting $350 million.

Then there's the asset management division. We're in discussion with a management team and plan to get this division going shortly.

In addition to these three areas, we're also finalizing our strategy before launching a significant credit business (microfinance, mortgage, auto, credit cards) within our retail formats.

What's FCHÆs role?

While each business will run independently, FCH will provide shared resources - developing strategy, establishing JVs/strategic relationships, fund raising, investor relations, business synergy, business operations and financial structuring. Our intention is that each individual business should focus on the deployment of its capital, leaving FCH too look after everything else.

What's the strategy for real estate?

We're developing a retail-led project with some mixed use (commercial, residential and hotel). When legislation permits, we want to launch a REIT around the $500 million mark in partnership with a global investor. We've also mapped 50 Indian towns with a population of more than one million people living within an 8km radius. We want to create malls in the centre of town that are leisure-cum-shopping destinations. A store from the Pantaloon stable could be an anchor tenant and that should ensure a strong footfall for other tenantts.

The Asian private equity space is very crowded. How can you differentiate yourselves?

Kishore Biyani made a success of Pantaloon Retail because he understood retail markets and the consumer psyche. We'll use this platform to differentiate Indivision. The strategy is consumer-centric and will leverage the strong distribution capabilities of Pantaloon, as well as the mentoring ability of our team. We've also hired world-class private equity investing talent and developed strong research capabilities.

Will your private equity investments have a sectoral bias?

We expect a large proportion of investments to be in the fast moving consumer goods (FMCG) sector - media, retail, logistics, entertainment and financial services.

What's the management structure for Indivision?

Within Indivision, Sanjiv Gupta and I are joint MDs. Prior to joining Indivision, Sanjiv was CEO of Coca Cola in India and South Asia. He's also worked with UnileverÆs Indian subsidiary, Hindustan Lever and in the media space. Sanjiv has an exceptional network and deep understanding of companies in the consumer space, which we aim to invest in.

What's your strategy for investee companies in the FMCG and consumer space?

Internally we call the strategy æmentor capitalÆ, as opposed to traditional venture capital. Rather than being passive investors we target companies where we can add value with hands-on mentoring.

We'll provide inputs on marketing (including branding, distribution, supply chain, logistics) organisation development as well as capital structure. Combined with our nationwide reach, this will place our companies on a strong growth trajectory. Indivision has already made its first investment in a branded food-product company, Capital Foods. We've doubled its revenues in just six months.

Over the next two years, we believe we can grown revenues another two to three times by leveraging our relationships via joint ventures, intelligent investing in capacity and developing complementary product lines. For a small food company to get the focused attention of someone with SanjivÆs caliber and the full distribution strength of the Pantaloon Group is quite rare and therefore very impactful.

What's the strategy for private equity investments in the financial services space?

Given that less than 50% of Indians have a bank account, we see great synergies between retail finance and shopping at a Pantaloon ôBig Bazaarö store. In addition, our access to almost 25% of all modern retail space in India provides with a point of sale for financial producs. This is an area where I will focus given my own background.

To your mind, what is the critical success factor for FCH?

Two simple things: vision and talent. Kishore had the vision to do something that changed the way people think about consumption in India. FCH has the same vision with a financial edge. The other key to success will come from our ability to attract and retain talent.

Our strategy is quite simple. We want to empower talent we hire to act like owners rather than employees. We want to give them the width and space to operate and the right financial incentives. We are rolling out a unique programme, LTWC (Long Term Wealth Creation) û a variation of certain Western compensation models, tailored for India.

Watch this space. YouÆll see news of very interesting hires over the next few weeks!

A full profile of Future Capital Holdings is published in the March issue of FinanceAsia.
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