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September 06, 2009

Interview with IDFC PE's Luis Miranda

Outlook Profit has an interview with IDFC PE CEO Luis Miranda on recent trends in the PE space.

On Increased Due Diligence in the new environment...
We had made an investment in a company some years back assuming that gas would be available for that particular power plant. When we did the technical due diligence, the main concern was will the gas be available? We spoke to the company, we spoke to GAIL, the gas producers, the ministry, electricity board, and everyone said supplies would commence. But the reality is that the gas never came. Now it’s a separate issue that the investment actually was a very profitable one for us. But now we may not take that for granted and will seek solutions rather than just assurances. Today, possibly, we would not made that investment and, as a consequence, also that kind of returns. So, if a company says that traffic will grow at ‘ x’ amount a year, we will do a bit more of our own analysis and question that more.

...On IDFC PE's exit from GMR Energy by swapping its stake for a stake in the listed parent firm GMR Infra
Let’s put it this way, at the end of the day we have to give money back to our investors. It’s was six years since we invested in GMR Energy and the company had not come out with an IPO because it was not there in their plans. If we’d have stayed on and not swapped our stake, it would have been six years and we would have been still holding on to that investment. But there are other companies where we invested in 2005 and we are still invested. So part of it is opportunistic. If the markets help with a higher return we will take it, but otherwise we go back to what our original holding plans are.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in