From succeeding an iconic CEO to convincing sceptical investors, the head of one of India’s largest PE funds discusses her early challenges and plans
The interviews were a part of what is known as the “key man” clause that allows investors in a private equity (PE) fund to refuse to honour investment commitments if important members of a fund’s management team leave. The questions Mulye faced must have been extra sharp, because she had just succeeded the high-profile Renuka Ramnath who steered ICICI Venture (I-Venture), one of India’s largest PE firms, for over eight years before quitting in a huff.
To make matters tougher, Mulye was parachuted from ICICI’s general insurance subsidiary to take charge of the group’s private equity arm in April 2009 at a time when the firm was raising money for an $800 million second fund and the overseas markets were in turmoil. Then she had the task of rebuilding a team that was weakened by the exit of at least four senior executives.
Exactly two years later, Mulye , sidesteps our questions on the huge burden of expectations when she took charge, and says she wants I-Venture – which currently has assets under management of over $2 billion – to go much beyond PE and become a leading alternative asset management company, managing funds across asset classes including PE, real estate, mezzanine, infrastructure and so on. Some more diversified funds are currently under development.
Since she’s always on the wing, Mulye doesn’t have the time to follow the standard “Lunch with BS”format of choosing a restaurant for us to host her. Instead, she’s invited us and we are in the spacious dining room – the décor could give any five-star hotel a run for its money – on the fourth floor of I-Venture’s headquarters in Mumbai. The stewards serve watermelon juice and vegetable soup. Mulye is a generous host – the starters range from chicken and paneer tikka to grilled pomfret – but she doesn’t seem to be particularly interested in the food and leaves the soup and starters almost untouched. The main course is again a lavish spread – chicken biriyani, roti, dal and sundry vegetable dishes – and is served at lightning speed. Mulye takes only a few small bites of roti with dal.
The 44-year-old mother of two says she understood investors’ initial concerns. Though most domestic investors knew her well because of her frequent interactions with them during her ICICI Bank days (a chartered accountant by training, she was the bank’s chief financial officer for a while), large overseas investors didn’t know her well that time.
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But the initial days of uncertainty are over and Mulye is back to doing what she does best. I-Venture is now in the middle of raising $750 million for an infrastructure fund, for which $150 million has already been raised from the domestic market. Mulye says large and long-term investors are happy to commit funds, because the product is such that the drawdown normally takes place over five years, so everybody knows that the entire money won’t be called in today.
The firm has also launched a small real estate fund with a target of $200 million – entirely domestic – to invest mainly in the residential space in large cities. The trend, she says, is that banks are continuing to invest in this asset class and there is a very good appetite from high net worth individuals.
She chooses to attribute all her success to parent ICICI Bank. “If large overseas investors supported me initially, it was not because of me, but I-Venture’s parentage,” Mulye says. Her gratitude to the bank that she joined as project officer in 1993 is evident throughout our conversation. Examples: “Mr Kamath (ICICI Bank Chairman) taught us how to think like an entrepreneur”; “Chanda (Kochhar, ICICI Bank MD & CEO) is just fantastic — she knows how to empower people” and so on.
That must be music to her bosses’ ears. For, the general perception that had developed during the last couple of years of Ramnath’s tenure was that the PE firm was drifting away from the mother-ship. Mulye doesn’t comment on the issue specifically, but says she will do all she can to ensure investors and employees that ICICI Bank’s shoulder is behind the I-Venture wheel. All this while maintaining an arm’s length distance, which is important given that the relationship between a bank and its PE arm is always sensitive from a regulatory perspective.
What also helped in her new job was the expertise she acquired while leading landmark fund-raising deals like ICICI Bank’s $5 billion equity offering in 2007, and the first hybrid capital issuance by an Indian bank in 2006.
Mulye shrugs off the impression that I-Venture is handling too many portfolios and couldn’t focus on each of them. “We are very active in investments as well as exits. Our first fund, which got an extension, will be exited completely by October this year. And 25 to 30 portfolio investments are quite decent as far as a large institution like ours is considered,” she says.
Under Mulye, the company has made some great exits as well. For example, it made a part-exit recently from its investment in engineering services company VA Tech Wabag. The PE fund has sold 10 per cent out of its remaining 14.6 per cent in the company earning 7.5x gross returns.
On her investment strategy, Mulye says she is bullish on the “recession-proof” Indian consumer growth space, with special focus on food, education and healthcare”. She is obviously putting her money where her mouth is. Among the recent investments are Star Health Insurance and TeamLease Services, a leading manpower solution company. On healthcare, I-Venture has already set up a holding company, I Ven Medicare, to manage its investments in four healthcare and hospital chains spread across the country.
Mulye isn’t keen to talk about I-Venture’s investments in failed retailer Subhiksha during her predecessor’s regime. The issue led to an open war with Premji Invest boss Azim Premji accusing I-Venture of leading him up the garden path. I-Ventures has since written-off the investment. Mulye would only say that it’s not possible to guarantee returns all the time.
As dessert is served – fresh fruit and ice cream – Mulye says one of her main challenges is to re-shape the organisation so that it remains entrepreneurial and innovative. “Hierarchies don’t matter in a business like ours,” Mulye says, adding one of the things she never misses out is the Monday meeting where all senior people are present to discuss, debate and share information on industrial sectors . “These meetings have no specific agenda, but the unwritten rule is each of the members present must have at least one new point to share. The rule has helped us to keep our eyes and ears open,” she says.
All this has meant extraordinary hard work and the occasional “guilt feeling” of not being able to spend enough time with her children. “I haven’t been able to escape the predicament of all working mothers, but at the end of the day, one has to strike a balance, since work is something that gives me an identity,” Mulye says. She remembers how just before she went on six-month maternity leave seven years ago, Kamath (then managing director) told her to come back refreshed because the bank has decided to make her the CFO and would keep the seat vacant for her. Mulye came back to work in four months.
But she has decided to make two compromises: one, Sundays are solely reserved for her children and, two, she plans her overseas trips scrupulously. For example, whenever she goes to New York – which is quite frequently – Mulye takes Air India’s direct flight at 12.30 a m so that she can reach her destination early morning New York time.
After a day of back-to-back meetings, she is on the flight back to Mumbai the same night. “Though I am away for three days, it’s actually one day because of the time difference,” Mulye says, adding “it’s physically stressful, but that’s the only way to have the best of both worlds.”
At any rate, her “interviewers” would be happy with that kind of meticulous planning.