Henry Kravis' tryst with Indian investment scenario
What's the story
Investment firm KKR's co-founder Henry Kravis will go down in history of investments with two words that remain highlighted in his career- "Leveraged buyout" and "go-go '80s" KKR currently has $130 billion in assets-under-management, of which $8 billion has been channelled to India. He is also someone who might have a solution for the bad-loan problem of Indian banking-system. Let's know more about him.
Bad loans
Bad loans- more you delay, worse it gets
Bad loans have had a crippling effect on the economy, burdening it with $180 billion of stressed assets. While speaking with ET, Travis said the way out is to privatize debt-ridden banks under a public-private partnership model facilitating capital infusion from the private sector to alleviate pressure. Kravis feels, it cannot be dallied, as bad loan problems will only escalate with time.
Interests
KKR's private equity investments in India
KKR's India wing has recently scooped up 10.3% stake in Bharti Infratel Ltd and had also backed Café Coffee Day, which had one of the most successful IPOs in Indian stock market history, when it decided to go public in 2010. Apart from this, KKR has vested interest in SBI life, Magma Fincorp, TVS logistics, Gland pharma, Dalmia Cement, Aricent and others.
Bankruptcy code
PM Modi and the bankruptcy code
One of the chief hiccups in India's growth wheel was its lack of a bankruptcy code. Kravis interacted with PM Modi during his US tour in 2014 and informed him the importance of having a bankruptcy code, which was finally implemented in May last year. Kravis believes that this code will prove to be pivotal in improving credit markets and opening up capital markets.
Capital infusion
KKR's Indian investments expansion plan
BV Krishnan who heads KKR's capital markets business said that they are looking to expand their distribution strength in the country and hiring key talents. Travis said the firm will be injecting more capital in the mid-markets and in small businesses whose only avenue of getting finance is via bank loans. The firm is also keen on setting up an asset reconstruction company soon.
Shift
From buyouts to minority stake holders
KKR in the 1980s were known to be notorious for their leveraged buyout strategy but Kravis admitted that when it came to India they had to revamp their strategy. Major businesses in India are predominantly family owned and are not comfortable with buyouts. Therefore, Travis' firm decided to settle on owning minority stakes and exploring mid-segment enterprises space as debt capital providers.
Trump
Let's talk about Trump's plans
Although he is effusive about investment possibilities and future expansion plans in India, but Kravis has maintained a distance about the situation brewing at home. The seasoned investor in him endorses Trump's vision of building a $1 trillion of infrastructure via public-private partnership model but still reserves his judgment on whether it can actually happen.
Do you know?
"Barbarians at the Gate"
Kravis was painted the villain for his $31.1 billion takeover buyout in the book "Barbarians at the Gate: The Fall of RJR Nabisco". It was a New York Times No. 1 bestseller and Harper Collins re-released it in 2008 on RJR deal's two-decade anniversary.