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Private equity funds go talent shopping for portfolio companies

Advent International, Blackstone, Carlyle, General Atlantic, SoftBank tapping managers for leadership roles. In the past few years, PE funds have preferred to invest in ventures where they get controlling stakes. This helps them to have greater co...

MUMBAI: Private equity (PE) funds have turned job providers in a market that has otherwise grown sluggish on account of a protracted economic slowdown. Top funds – which have infused capital into greenfield ventures – are hiring a significant number of mid and senior-level managers to staff these new businesses.

PE firms such as Advent International, Blackstone, Carlyle, General Atlantic, SoftBank, Naspers, Temasek, Everstone, True North, TA Associates, Kedaara Capital and Multiples Alternatives – which have created ‘investment platforms’ in the recent past – are said to be hiring for leadership roles in their investee companies.

Such platforms group sector-specific investments and involve backing a management team, which is mandated by the PE fund to start a company from scratch. The growth path for these companies could be organic or through a series of strategic acquisitions in related fields.

“PE funds are seeing tremendous growth in India, be it platform deals, controlled transactions or plain vanilla investments,” said Sanjay Nayar, India head of global PE fund KKR. “As more and more PE funds assume control over the companies they invest in, they have a larger say in hiring and talent acquisition to build management depth for the right skills and sustainable growth.”

Big-ticket hires in the past six months include Arpit Chug, chief financial officer, and Amitabh Tewary, chief innovation officer, Razorpay; Gaurav Khandelwal, chief financial officer, Oyo; Shekhar Mishra, head, corporate finance, M&A and alliances, Ola Electric; Ankit Jain, cofounder, Ola Electric; Narayan Saraf, CFO, PharmEasy; Abhinav Yajurvedi, CTO, PharmEasy; Amit Sachdeva, head of finance, Grofers; Parag Shah, CFO, Essel Propack; and Hemant Taware, chief business officer, Innoviti Paym ..

In the past few years, PE funds have preferred to invest in ventures where they get controlling stakes. This helps them to have greater control over operational aspects of the company.

For instance, Advent Capital acquired men’s innerwear manufacturer Dixcy Scott and women’s lingerie maker Enamor to build a platform for branded innerwear in the country.

Global funds such as Blackstone, Everstone and Actis, among others, have also spawned similar platforms in varied sectors. These funds hire professional managers to helm companies on various platforms. Several PE-backed companies such as Dixcy Scott, Mphasis, Essel Propack and Aadhar Housing have seen an uptick in mid- to top-level hiring.

“There is an increasing demand for leadership talent from PE-backed high growth companies across sectors,” said Nagesh Wagh, managing partner, VitoAltor. “Our PE clients are very actively scouting talent who can fit their diversified portfolio and can contribute in value creation of their portfolio firms to aid their next level of growth.”

HIRING ACROSS ROLES The demand for talent is across functions such as corporate development, digital, finance and product related skills.

“There is a huge opportunity for companies that have private equity investment. Such companies in sectors such as edtech, medtech, fintech etc. have stepped up hiring and will continue to do so as long as the funding continues to grow,” said Shailja Dutt, managing director, Stellar Search.

Blackstone alone hired 20 CXOs and 15 board members for its portfolio companies. Some of the prominent names include Dalip Sehgal, who is chief executive of Nexus Malls, Rajesh Vishwanathan, CFO of Aadhar Housing Finance and Parag Shah, CFO of Essel Propack. “Our partner companies primarily focus on superior execution to grow and gain market share,” said Vishal Nevatia, managing partner, True North, an India-focused bulgebracket PE fund. “The current slowdown is impacting our partner companies relatively less and they are continuing to grow nicely and adding to their talent pool at all levels.” The downturn is providing them a good opportunity to bring on board quality talent which otherwise is difficult to attract, Nevatia said.

MONEY ISN’T A PROBLEM PE-funded companies are well capitalised to expand their teams even at a time when there is a recessionary pressure on hiring and some companies are downsizing teams. Data show that PE investments into India have been steady in the past three years. India saw an inflow of $36.80 billion of private equity investments in calendar 2019, slightly up from $36.20 billion in the previous year, according to Venture Intelligence data.

“Despite suppressed GDP growth against expectations, there is significant upside headroom. With yo-y rise in indicators like ease of doing business, and a progressive securities regulatory framework, private capital will continue to be attracted to India,” said Utkarsh Sinha, managing director, Bexley Advisors, a homegrown investment bank.

Apart from this, as more PE funds take controlling positions in Indian companies, governance becomes the focal point.

“During difficult times, talent tends to gravitate towards safer boats with better governance practices and PE-backed companies have relatively better growth and governance standards,” said a fund manager.

The article was first published by the Economic Times India. Read the original article here: //

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