Sumir Chadha’s Westbridge Capital/ Jwalamukhi Holdings is i of the best Private Investment inwards Public Equity Fund inwards India. In the latest result of Outlook Business, Sumir Chadha of Westbridge Capital/ Jwalamukhi has given of import pointers of the fund’s investment strategies inwards Indian Market.
Sumir Chadha’s Profile Sumir Chadha is a co-founder in addition to managing manager of WestBridge Capital. Prior to this, he co-founded in addition to was a Managing Director of Sequoia Capital India. Sumir currently serves on the boards of SKS Micro Finance Limited in addition to Vistaar Financial Services Private Limited.Sumir was before a usage of the Principal Investment Area at Goldman Sachs & Co, based inwards New York in addition to Singapore, where he focused on venture upper-case missive of the alphabet investments across USA in addition to India. He began his career every bit a management consultant at McKinsey & Co., based inwards New York in addition to New Delhi.
Sumir served every bit the Chairman of the Indian Private Equity in addition to Venture Capital Association (IVCA) from 2010-12 in addition to currently serves on the Republic of Republic of India Advisory Board of Harvard Business School in addition to on the Advisory Board of the Princeton Institute for International in addition to Regional Studies. Sumir has an MBA (with Distinction) from Harvard University in addition to a BSE grade inwards Computer Science from Princeton University.
Why Westbridge Capital selected India India has a huge seat out of listed companies – over 4,000 – which agency at that topographic point is a massive chance to discovery expert stocks. In other countries you lot don’t discovery this – inwards Brazil, at that topographic point may hold out 500 listed companies, inwards Indonesia, it’s a distich of hundred. In India, for historical reasons, it is slowly to larn listed in addition to nosotros don’t receive got Sarbanes-Oxley in addition to all that materials that inhibits promoters from coming to Blue Planet market, similar inwards the US.
Indian marketplace is highly volatile If you lot are a patient long-term investor, it genuinely plant to your advantage. Because when things larn depressed, they larn hence depressed that at that topographic point arises a bang-up chance to buy. And when they larn euphoric, they larn hence euphoric in addition to that is a expert fourth dimension to sell. We await at volatility every bit our friend. Say tomorrow at that topographic point is a abrupt marketplace downturn, nosotros would beloved it. We receive got a lot of uncalled upper-case missive of the alphabet in addition to cash. We would only outset buying inwards our ain names. When things larn also hot nosotros outset exiting, if things larn mutual coldness nosotros usage that every bit an chance to purchase a lot. That is how nosotros grapple our ain risk.
Long Term Holding Strategy Long term tin hold out really long or brusque depending upon the situation. But, generally, nosotros accept a five-to 10-year view. The way our electrical current fund plant is that, different a somebody equity fund, it is an ever growing fund. So, inwards many cases, nosotros may halt upwards concord something for xx or xxx years. Some of our companies nosotros may never sell. So, our fund is designed to hold out a niggling flake to a greater extent than similar the wealthy families inwards India, where if you lot are investing your ain money, only leave of absence it there, you lot don’t receive got to sell. But some-times, nosotros may sell really rapidly if a stock runs upwards a lot inwards a really brusque period. We sell because inwards a world marketplace at that topographic point is ever the chance to purchase it cheaper. Hence, different a PE fund, nosotros savour a lot to a greater extent than flexibility in addition to that is a huge advantage.
Highly concentrated portfolio We receive got a really concentrated portfolio, a genuinely small-scale seat out of high lineament companies. Our locomote yesteryear 12 companies concern human relationship for nearly 75% of our asset value. So, nosotros don’t concord a huge seat out of investments. We are non afraid to seat a lot of coin into these companies because nosotros believe inwards them. Or, if nosotros don’t believe inwards them nosotros don’t invest. We are non similar a mutual fund inwards Republic of Republic of India that volition typically ain lxxx stocks inwards the portfolio. We discovery that a riskier approach. We don’t desire 80. We desire the locomote yesteryear 10 or 15, hence nosotros are genuinely choosy. In India, over the by xvi years nosotros receive got invested inwards 200 companies. We invested inwards many of the companies when they were small-scale in addition to nosotros were on the board. Now they are listed. We know either the promoters or the board members pretty good from many years. Also, before investing, nosotros produce the commons things: a background check, post an investigative trace solid to banking concern lucifer on diverse things, in addition to our ain calls or references. We pass a lot of fourth dimension amongst them, in addition to nosotros either larn comfortable or nosotros don’t. Any whiff of promoter run a peril in addition to nosotros walk away.
Do receive got an Exit strategy If prices plough also steep, nosotros cash out. We sold quite a lot of stuff, 1000000 dollars worth of stocks, inwards the by 3 quarters. So, nosotros receive got exited quite a bit. If things locomote along going upwards nosotros volition locomote along exiting. In mid-caps, inwards a deport marketplace at that topographic point are no buyers in addition to that is expert because nosotros are the buyers who larn these stocks at a discount. In a bull market, at that topographic point are enough of takers. You should come across how many calls nosotros larn for many of our companies saying, “Please, tin you lot laissez passer me a block stake!”
For a typical structure, accept Mayur every bit an example. The company’s promoter owns over 70% of the society in addition to nosotros ain 10%. We receive got the largest non-promoter asset in addition to hence at that topographic point all these small-scale retail shareholders. The promoter is never going to sell, hence anyone who wants to ain something substantial volition come upwards to us. Half the fourth dimension nosotros are proverb ‘no, but inwards the by 3 quarters, nosotros sold quite a lot. But then, nosotros sell exclusively inwards a expert market. If it is a bad market, nosotros volition non sell. So, when the marketplace was genuinely bad inwards 2011, 2012 in addition to 2013 nosotros invested heavily in addition to nosotros sold nothing. Then concluding yr the marketplace became expert in addition to nosotros started selling, but really selectively.
Westbridge Capital Portfolio Holdings - Kajaria Ceramics
- Prestige Estates Projects
- Greenply Industries
- Astral Poly Technik
- AIA Engineering
- Cera Sanitaryware*
- La Opala RG*
- Mayur Uniquoters*
- Greenlam Industries
- DFM Foods
- Mayur Uniquoters*
- Greenply Industries
- Ceat
- DFM Foods
- Hatsun Agro Products
- Ashiana Housing
- Greenlam Industries
* IHG Recommended Stocks
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