During our trip to India we had the opportunity to visit Everstone Capital, one of the top private equity shops in India that has over $1B under management. For context it is worth noting that:
(A) India has a land mass that is 1/7 of the US, but has a population of 1.2 billion people;
(B) Indian consumption drives the economy, and the country is extremely reliant on imports; and
(C) the country has an extremely young working population, which means that it is situated well for strong growth over the next 20 years.
Everstone has looked at all of the aforementioned attributes and created a unique manner of investing. First and foremost, they believe in growth investments over the long term. When Everstone invests in a company, they function like an operating company with capital in that they are going to work closely with the portfolio company’s leadership on the operations of the portfolio company. Because of the long-term nature of Everstone’s investment and the hand-on manner in which they operate, the diligence process in choosing a company is extremely important. Everstone not only conducts intense financial diligence, but they also conduct careful operational diligence so that they understand the portfolio company very clearly. Finally, Everstone has its own HR, legal and IT departments that work internally for Everstone and also work with its portfolio companies. This is extremely valuable because they are not dependent on outside forms for these particular areas of expertise. India is a hotbed for entrepreneurship and this facet of India is going to be extremely important to driving growth. PE funds like Everstone are going to really complement India’s growth well because of the nature in which they do business, and the pride they take in investing in Indian businesses.