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Right time to start investing: ICICI Venture MD

July 31, 2009 02:26 IST

Vishakha Mulye, 40, speaks in a measured tone, but with the quiet assurance of someone who knows her onions. Just three months into her job as the managing director and chief executive officer of ICICI Venture, one of India's largest private equity firms, Mulye's biggest challenge is the burden of expectations -- first, she replaced the high profile Renuka Ramnath who steered the firm for over eight years; second, the market condition for raising money is hugely challenging; and third, she has had to re-shape the organisation and, in the process, let some people move on.

In her first interview after taking charge, Mulye, a chartered accountant who joined the ICICI Group 16 years ago, shrugged off the so-called burden. "The external environment is coming back on track and we have strategies in place to take the firm forward," she said, declining to comment on her predecessor's projections of ICICI Venture managing a corpus of $10 billion by 2010.

Mulye said she was currently focused on the new PE fund, which was already in the market. Though she refused to confirm it, sources said the firm has already raised 0 million from local investors and expected to approach overseas investors once the international markets bounced back. "The foreign markets are tough as people still haven't got back the confidence, but there is a lot of money within India waiting to be tapped," she said.

In response to speculation that many limited partners were refusing to make fresh commitments to the $810-million India Advantage Fund Series 2, by invoking the 'key man' clause, she said, "No one has pulled out money. This is a standard procedural matter and something which will be sorted out soon".

ICICI Venture has already deployed two-thirds of the fund.

Mulye should know as she was earlier the chief financial officer and treasurer of India's second-largest bank, ICICI Bank, and has hands-on experience in raising money abroad. Mulye said the appetite for investing in India was evident in Japan, West Asia and some parts of America, though the majority of investors were still in a wait-and-watch mode.

She, however, felt that this was "the right time to start investing" as the stretched valuations of the past were becoming more realistic. "A few years ago, everything people touched turned into gold. Now, people have become more realistic. That gives us a lot of good opportunities to invest," she said.

ICICI Venture, she said, had already started that process. While not commenting on specific companies, Mulye said education, healthcare, infrastructure and energy were sectors that looked promising at this point.

On real estate, Mulye said she was more interested in the residential side of it -- affordable and urban housing in Tier I cities and the firm was already in advanced stages of negotiations with several companies. Commercial real estate, she said, would still take some time to come back on track due to oversupply and deceleration in demand. The firm already has a well-established real estate practice, which manages a three-year-old $550-million fund, which is yet to reach its maturity phase in terms of value.

On healthcare, ICICI Venture has already set up a holding company, Iven Medicare, to manage its investments in four existing healthcare and hospital chains spread across the country.

The vision is to create a highly efficient and integrated healthcare delivery system on a nationwide basis using a platform, which combines the financial and operating capabilities of a private equity player with the domain knowledge and wisdom of the doctors running the chain.

The firm's operating team, led by Joint Managing Director Rajeev Bakshi, provides management support and the idea is to bring in value once these hospitals achieve a certain scale. The firm will look at exit options at an appropriate time like an initial public offering of the holding company, secondary stake sale or listing of individual companies.

Mulye said the firm was keen on an infrastructure fund as well, and preparatory talks were on to invest in this sector. The infrastructure team at ICICI Venture is currently being set up and the firm is deliberating on a "theme" for its foray into infrastructure.

On the firm's exit strategy, Mulye referred to last month's sale of RFCL's Vetnex Animal Health division to Pfizer. Vetnex is a part of RFCL, a significant stake in which was acquired by ICICI Venture from Ranbaxy Laboratories for about Rs 50 crore, in 2005.

The sale was reportedly done at over Rs 200 crore. Mulye said RFCL was a classic ICICI Venture buyout, involving the divestiture of a non-core business of a large corporate along with participation from the management team of the business.

The transaction reinforced the ICICI Venture's way of investing in fundamentally strong businesses, and adding value through strategic direction, acquisitions and efficient capital allocation.

On the revival of the IPO market and the exit route for other investments, Mulye said the firm was in the process of making some of its investments "IPO-ready" and would look at such options at an appropriate time.

On the exits that her firm has seen at the top, Mulye said the number was far too small to make any significant impact and she has already brought in a new structure in the company, mostly with people who had been around in the firm for over a decade and a few external hires.

Apart from herself and Bakshi, the firm will have five presidents and three directors, who have been involved in the full cycle of investments from nurturing to divestment. The new hires include Prashant Purker, former managing director (global finance) of Lehman India, as president. Sumit Chandwani, Jayanta Banerjee, KS Jangbahadur, Prashant Purker, Vandana Rajadhyaksha, Anand Vyas and Sunay Mathure will form the core team now. Another president has already been identified and will be on board in the first week of August.

Mulye said exits done so far in the first PE fund that her firm raised around 2003 had achieved an IRR (internal rate of return) of 62 per cent. Half of that fund, which had raised Rs 1,100 crore, has been divested already and the firm has got an extension of two years for divestment of the remaining half. "We hope to once again deliver superior returns to our investors when the divestment comes up in October 2011," Mulye said.

That's a formidable track record that Mulye is heavily banking on.

Vishakha Mulye: A brief profile

  • A chartered accountant, she joined ICICI in 1993.
  • Key member of the team responsible for ICICI's NYSE listing in 1999.
  • In 2001, she headed ICICI's structured finance business
  • Led the team that planned and executed the merger of ICICI and ICICI Bank in 2002. As part of the strategy to generate the liquidity required for the merger to meet regulatory liquidity ratios, she developed structures for sale/ securitization of ICICI's loan portfolio and generated investor interest in these products.
  • From 2002 to 2005, she was responsible for the bank's structured finance and global markets businesses, and its financial institutions relationships. She is credited with being a key driver and enabler of the debt securitization market in India for retail and corporate business.
  • From 2005-2007, she was the CFO of ICICI Bank and her responsibilities included planning & strategy, treasury (including proprietary investing in equity & fixed income markets), risk management, corporate communications, investor relations and financial reporting. Under her leadership, the bank raised close to US$ 7 billion in equity capital and several billion dollars of debt financing.
  • She led landmark fundraising deals like ICICI Bank's US$ 5 billion equity offering in 2007, and the first hybrid capital issuance by an Indian bank in 2006.
  • In 2006, she negotiated and executed ICICI Bank's acquisition of another private sector bank in India. During this period, one of her key responsibilities was monetization and value extraction from the Bank's portfolio of long-term non-strategic investments across several sectors
  • In October 2007, she was elevated to the board of ICICI Bank's general insurance subsidiary as the number two to the CEO
  • Was selected as a 'Young Global Leader' for the year 2007 by the World Economic Forum and named one of the "Most Powerful Women in Indian Business by Business Today. She was awarded the India CFO Award, 2006 instituted by IMA
Shyamal Majumdar in Mumbai
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