Skip to main content

Interview with Vishal Tulsyan, CEO of Motilal Oswal Private Equity




Vishal Tulsyan, CEO of Motilal Oswal Private Equity, which has invested 50% of its $125 million first fund across eight companies including dairy firm Parag Milk, “reverse logistics” firm RT Outsourcing and Rajasthan-based NBFC AU Financiers, recently spoke to N. Sriram of Venture Intelligence. Some excerpts:

Venture Intelligence: What is your outlook for the PE market in India over the next 2-3 years?

Vishal Tulsyan: Deal flow will slowdown. In the last two years, many companies raised money, not because they required money but they wanted to set a benchmark valuation and eventually go public. Going forward, you would see a fewer number of such deals happening. Companies with genuine need for outside capital, who have the right mix of capital structure in place, will be the ones out there to raise money.

We will see fewer pre-IPO deals because we will not see a strong capital market. Exits will definitely become difficult. Investments that happened in the last 2-3 years expecting an exit at the end of 2008 or 2009 will have to wait for some more time.

We would probably see more controlled deals happening in the coming 1-3 years.

VI: Will India-dedicated funds find it difficult to raise money?

VT: My view is that the global liquidity crisis that we are witnessing right now would be beneficial for India but that process will be slower, because the capital pool that was available globally has shrunk. So, people are going to be selective about the funds that they are going to put their money in. The due diligence process for people to commit to any fund is also going to be stricter now. The next 3 years would be a time to separate men from the boys.

VI: Given the current market conditions, would you look at changing your preferences with respect to the stage of the companies you invest in?

VT: We essentially look at providing growth capital. Going forward, we will continue to do that. We would invest in companies which are 5-7 years old and with a sustainable track record.

In the last 3-4 years, the deals that have happened in India have been more of the pre-IPO kind. Now, investors would start looking at providing growth capital and would also look at liquidity events (which need not necessarily be an exit) 3-5 years from the date of investment.

VI: How about your sector preferences?

VT: During the last 6-9 months the overall profile of the economy has changed. The sectors that were looking hot 12 months ago are not so now. People have started to look at businesses that are not cyclical in nature, sectors which are not truly dependent on the performance of the economy over the next two years.

A sector that was left out in the past two years is the pharma sector. I expect pharma to witness more PE action in the coming quarters.

VI: Which other sectors do you see doing well?

VT: FMCG, consumer services and infrastructure for sure. The government’s 12th plan had allocated about half a trillion dollars for infra; even if only $300-350 billion is spent, that itself is a huge amount. You will see a lot of money going into the infrastructure sector.

VI: Would you avoid any sectors?

VT: We would avoid cyclical ones. We would be very careful about auto ancillaries and the auto sector. Because we see huge contraction in demand particularly in USA and Europe, wWe are also less optimistic about companies whose fortunes depend heavily on exports. Demand contraction may be seen in India as well but it would not be as much as what is seen elsewhere.

VI: What would be your average deal sizes?

VT: The deals would be in the range of $5-15 million. A perfect investment would be where, once we have made our investment, the company is completely self-sufficient in the next 3-5 years as far as cash flows are concerned. A company should generate cash flows which not only meet its working capital requirement but also its incremental capital expenditure requirement. Even after that, it should be left with enough cash to pay dividends to investors.

Popular posts from this blog

PE-VC investments in Q2'23 decline 33% to $9.9 Billion

Private Equity-Venture Capital (PE-VC) investments in India during the quarter ended June 2023 (Q2'23), at $9.85 Billion across 182 deals, registered a 33% decrease compared to the same period in 2022 (which saw $14.6 Billion being invested across 371 deals). The investment amount however rose 74% compared to the immediate previous quarter (which saw $5.7 Billion being invested across 181 deals), shows data from  Venture Intelligence , a research service focused on private company financials, transactions, and their valuations. The PE-VC investment figures for the first 6 months of 2023 - at $15.5 Billion (across 363 deals) - was 50% lower compared to the same period in 2022 (which saw $31 Billion being invested across 800 deals). Q2’23 witnessed 19 mega deals ($100 M+

Chiratae, Speciale and Stride Ventures win APEX'24 Venture Capital Awards

Chiratae Ventures, Speciale Invest and Stride Ventures were awarded as among the leading Venture Capital investors in India for 2023 as part of Venture Intelligence APEX‘24 Private Equity & Venture Capital awards event in Mumbai.  The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms and "crowd sourced" voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Return Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies) VC Investor of the Year Chiratae Ventures received the Venture Capital Investor of the Year 2023 Award on the back of 10 part exits totaling $178 million via Secondary Sales during the year. Its exits included those from retail unicorn Lenskart, SaaS Startup Pixis and baby pr

Blackstone, MO Alts and InvAscent win APEX'24 Private Equity Awards

Press Release Blackstone, MO Alternates (formerly Motilal Oswal PE) and InvAscent were awarded as among the leading Private Equity and Growth Capital investors in India for 2023 as part of Venture Intelligence APEX‘24 Private Equity & Venture Capital awards event in Mumbai.  The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms and "crowd sourced" voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Return Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies) PE Investor of the Year Blackstone received the Private Equity Investor of the Year 2023 Award on the back of strong complete exits during the year: from Sona Comstar and IBS Software. Ganesh Mani and Amit Dalmia, Senior Managing D

Avendus tops League Table for Transaction Advisors to PE deals in Q1'23

Aeka Advisors and Ambit claim the No.2 & 3 slot Avendus topped the Venture Intelligence League Table for Transaction Advisor to Private Equity Transactions for Q1 2023 advising 5 deals worth $808 million. Aeka Advisors stood second having advised 3 deals worth $228 million. Ambit followed with 4 deals worth $160 million. Ernst & Young ($114 million across 4 deals) and o3 Capital ($80 million across 2 deals) completed the top five for Q1 2023. Avendus acted as advisor to ADIA’s $500 million investment in omnichannel eyewear retailer Lenskart . Aeka Advisors acted as advisor to Kreditbee’s $160 million fundraise from Advent International, Mitsubishi UFJ Financial Group (MUFG) and existing investors. Ambit advised the $104 million fundraise of Freshtohome from Mount Judi Ventures, Iron Pillar, Amazon and others. The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on the value of PE

PE-VC investments fall 38% in 2023 to below $30 B

The value of investments by Private Equity - Venture Capital (PE-VC) firms in India fell by 38% to less than $30 Billion in 2023. PE-VC firms invested $29.7 Billion (across 756 deals) in Indian companies in 2023, compared to $47.6 Billion (across 1,362 deals) in the previous year, reports Venture Intelligenc e, a research service focused on private company financials, transactions, and their valuations. (Note: These figures exclude PE investments in Real Estate).                                                                                                                                                                      2023 witnessed 67 mega deals ($100 M+ rounds) worth $21.2 Billion, compared to 112 such investments worth $31.8 Billion in 2022. The $2.4 Billion investment in Manipal Hospitals by Temasek (which gained majority control) and TPG Capital was the largest PE-VC investment in 2023. This was followed by the $1.35 Billion buyout of education loans focused HDFC Credila