: What is your strategy in the real estate and media space where you have a large exposure? Are you looking at the print and broadcasting sector or the growing film infrastructure arena? There are also many film funds coming up "" is that an area you'll be looking at?
Both real estate and media have a compelling story, and we believe those sectors provide interesting growth opportunities. We have already invested with prominent players in both sectors, and we are committed to help them grow. We are definitely interested in backing quality filmmakers in India. Our firm has experience and expertise in backing successful producers make low-budget films, primarily providing mezzanine debt to companies and we tend to be highly selective in this area.
Given how real estate prices are falling and real estate shares are taking a beating, is it still a great investment?
Real estate in India has seen phenomenal growth in the recent past, mostly based on the fundamentals of the sector and the economy. Some part of the growth is attributable to the speculative nature of the real estate business. In some regions and locations, real estate prices currently seem to reflect overvaluation in the short term; however, we believe there will continue to be opportunities.
How do you compare the Indian and Chinese market from an investor's point of view?
I think there are fundamental differences between the two economies, though we believe that both will continue to grow and become major players in the world.
The market correction in India has brought valuations to more realistic levels. Has this resulted in a better pipeline for deals or are entrepreneurs holding out? Some deals have also been called off by PE players. What are the reasons for this?
The correction has definitely brought valuations down, but whether current valuations reflect 'realistic levels' is highly subjective. Our deal flow has increased in the recent past, and we expect to see a strong pipeline going forward. Short-term market fluctuations do not affect our long-term commitment to private equity investments. As to why some deals are being put off by other PE players, I cannot comment.
Will the current global uncertainty affect flows to emerging markets like India? What are the returns you're expecting from India in the medium term?
The current uncertainty in global markets has created enormous opportunities for those who still have capital to invest. We are seeing deal terms now with higher expected returns compared with what we were seeing one year ago.
Is the Indian growth story overplayed? What are the other markets DE Shaw is bullish on?
We believe the Indian growth story is here to stay; it may have been overplayed by some, but we think there are strong fundamentals behind the story and that India will continue to grow at high rates. We also see increasing opportunities in China in both the public and private markets.
You have transitioned from being a hedge fund to being an alternative assets provider. What is this shift and what is the current mix of your assets?
Quantitative strategies are an integral part of what we do, but we've diversified into other areas of investing as well. Over the years, we have applied our rigorous analytical approach to other strategies that involve more fundamental analysis, including areas such as real estate, private equity, and direct capital.
Do you have an India allocation? If so, what is the amount? Which are the sectors you find promising?
India is one of the core areas of focus in the DE Shaw group's real estate and private equity efforts, and also represents a significant portion of our international convertibles business. As a firm, we have well over $2 billion in Indian assets.
What is your investment philosophy? Why should an entrepreneur come to DE Shaw instead of to one of your competitors?
Entrepreneurs want an investor who shares their vision and provides the support needed to achieve their goals, and so we aim to be a trusted, long-term partner. As a philosophy, we focus on backing businesses with sound fundamentals and management teams. We try to identify strong companies with the potential to become leaders in their sectors. This is a big challenge which requires a lot of financial and personal commitment, but I think we have been up to the challenge.
We also have a long-standing involvement in the region. The firm established a presence in Hyderabad more than ten years ago, and we have more than five years' experience trading in the foreign currency convertible bond market in India. In 2006, we became more active in private equity in the region. As of April 1, the firm has approximately $36 billion of aggregate investment capital.
Between our large and flexible capital base and our experience in investing and deal structuring, we think we're well-positioned to pursue a variety of opportunities as they emerge in India's rapidly growing economy. We have world-class employees and excellent investment professionals and back office support, and collaborate across departments to deploy and leverage our broad range of expertise.
