The Venture Intelligence Blog

From the "Dear Lucy" career advise column in Financial Times. At a dinner party last Saturday I was asked by a fellow guest what I did and I said I was an investment banker. I might as well have said I was a paedophile. Suddenly the whole table – all friends of my wife from the art world – turned on me with such venom I was really taken aback. I tried to defend myself by saying that I had nothing to be ashamed of in the work that I do in M&A, but the more I argued the more hostile the other guests became. Next time this happens – and I fear there will be a next time – should I accept guilt for what isn’t my fault, or should I lie and say I’m a librarian? There is absolutely no point in trying to convince arty people that you are anything other than the devil; any attempt will make things worse. The complaint against investment bankers is that you have dragged the world into recession through your greed, stupidity and arrogance, and any attempt to say otherwise will enrag...

In an article for The Economic Times, Suhel Seth, an advisor to British Airways, points out the problem facing Indian airlines has more to do inaction on "vital but unpopular steps" on the policy front, including "day-light robbery" by PSU oil firms on the ATF pricing front. States in India are levying a state sales tax of 25% to 32% on ATF (aviation turbine fuel). But the catch is not just the obscenely high tax. The base rate of the ATF that is being offered by the oil companies is double the international price of fuel at current rates. So while Murli Deora has every right to berate the airlines for not paying the oil companies on time, the truth of the matter is, they are not selling ATF. They are instead indulging in day-light robbery and operating as a cartel , not the airlines. The Airports Authority of India charges the highest for any aircraft related activity. For instance, the landing charges in India are the highest in the world; add to that the infrast...

Moneycontrol.com has a video interview with Ashok Wadhwa, MD of Ambit and Sumanth Sinha, COO, Suzlon Energy, on the drying up of deal activity. Both panelists agreed that more transactions that are still on the table are likely to get renegotiated on account of falling valuations and the derailing of the financing plans for the deals. Wadhwa: Pure-cash buyout transactions will not happen for a period of time (in significant numbers or value) because the cash for making these transactions happen is just not available. But I do see this as an opportunity for people to consolidate. ...Those who have money will be able to get bargain deals without question and therefore our advice to all our clients at this point of time is: keep your cash tight for a three-six month period. You will really get outstanding value, probably even better than what you have today in but even in the interim, there will be consolidation through stock swaps. I do see that people have gone and incurred significa...

AltAssets reports on the Swiss-headquartered PE fund-of-funds manager's annual press conference in Frankfurt. The current global financial crisis will impact private equity in three waves: firstly, through a correction of EBITDA multiples in the short term; secondly, through a contraction in corporate earnings caused by a reduction in GDP growth rates; and thirdly, through some companies' need to seek refinancing in a more challenging credit environment, Adveq said at its annual press conference in Frankfurt. The Swiss-headquartered private equity fund of funds manager spoke in detail about its current market assessment and outlook for the private equity industry. ...Bruno Raschle, CEO of Adveq, said, "The world is currently experiencing financial markets turbulence that is unprecedented, at least for the past several decades, and this has a number of implications for the private equity market, both for existing and new commitments to the asset class. However, while it is...

In an article for The Economic Times, Janmejaya Sinha, MD at The Boston Consulting Group India, makes a passionate and stats-filled case for an urgent freeing up of the Education sector in order to prevent India's "demographic dividend" from turning into a curse. India's workforce today has 484 million people. Of these 273 million are working in rural areas primarily in agriculture (many of them clearly underemployed), there are another 61 million working in manufacturing and about 150 million in services. Shockingly, 40% of the current workforce is illiterate and another 40% is below 12 class pass. That means 200 million of our workers cannot even sign their name! Given that 60% of our workforce is in rural areas, which provides only about 18% of our GDP and the growth engine for our economy is the services sector, these simple statistics condemn our rural workforce to penury and destitution. What is worse, given their skill levels it is very difficult for them to e...

On the "Samvat 2065" show on CNBC-TV18, Samir Arora of Helios Capital Management pointed out something I've been thinking of frequently in recent months: why are there so few market experts (at least on TV) whose opinions are as bold and more importantly, as reasonably accurate, as that of First Global's Shankar Sharma. Arora: We cannot talk about Shankar because he has been right most of this year and I totally appreciate that. But look at other people who come on your channel and look at what they have been saying about oil, (they said) oil was in shortage and it was going out of supply that there was one last Saudi Arabian field [remaining] in the world. With great conviction, everybody would come in and say the same things. Three months later, they come now and say [prices of] commodities are going down. In fact, barring a few other exceptions, most "experts" I see on TV over the past several monthly have been saying that "there is likely to be a m...

Normally, Samir Arora of Helios Capital Management makes for good TV. Not on the "Samvat 2065" program on CNBC-TV18 though. The often volatile sparring between his co-panelists - well known stock market investor Rakesh Jhunjhunwala and Shankar Sharma of First Global Services - on Diwali day, made the normally outspoken Arora seem quite staid. Some of the issues the two disagreed strongly on included the rising US dollar (SS believes it will continue to appreciate; RJ the opposite), sectoral trends (SS insists the winners in the bull run will suffer the most since that's where investors can still "recover" some profits; RJ disagrees) and India's correlation with global market (SS feels India will continue to be highly correlated; RJ insists actual earnings matter more). Samplings from the colorful debate: SS: The reason why emerging markets did well was because the weak US dollar drove up commodity prices. That drove earnings in emerging markets in general, m...