Private Equity in India
I'm at a US-based EB/MM right now (Gugg, Jeff, WB) and I'll be joining a $1Bn MM PE shop in summer 2021, and I'm thinking about my long term plans. My short term plan is to get an MBA and try for a senior associate position at my firm or a comparable firm (firm has a 2/3 year associate program). One thing I've been considering is that I am of Indian-descent (moved to the US when I was a year old) and understand/can speak a decent bit of Hindi. Know that the India market is growing super fast and seems to be prime area of opportunity to make a good bit of money. Few firms I can think of are ChrysCapital and Baring Private Equity Asia as well as some MFs that have set up shops there. Know it might be a huge culture shock for me to move there, but does anyone know the scene there, how the hiring process looks like and whether my background could work well for a move there?
First, are you really comfortable with Indian average compensation for the industry? PayScale suggests that it is around 12k USD annually (for IB)... Second, I really think that with US EB and MM PE under your belt you will face little to no competition in India. They do prefer candidates with Western experience over the locals.
Yeah that number is most definitely off lol
OP - I have spent a lot of my career looking at Indian PE firms as an allocator and know the market pretty well... Before I go on, you need to ask yourself this...
What do I want in life?
Seriously. If you want to move back to India and live there long term, or have family there and want to settle there or be in Asia in general long term or whatever, then why not? However...
India is one of the world's worst PE markets. Literally.
Pricing is high (private often transact at a premium to public markets) - competition and over-brokering of deals in market
INR depreciation and inflation KILL USD-based returns (remember Funds raise capital in USD, convert to INR, invest in INR, exit in INR and then convert back to USD to give capital back to clients)
Getting out of businesses is hard (like harder than rest of Asia). This means regardless of Firm prestige, usually net returns to investors are lower than in other Asian markets and often that of DM. Seriously, even with all of the EM risks, and challenges with politics and legal systems. Indian blowups are something everyone even in Asia laughs about. Across firms/prestige/size etc.
Like in the rest of Asia, so much of PE like sourcing is all about who you know and what school you/mom and dad went to, you aren't local (or are you?). That's how you get promoted and move up and make money. Like the rest of Asia, Indian PE is super hierarchical, the old guys know everyone and run around while the rest do the other work. There isn't much development and to move up beyond a certain level you have to be lucky, get a deal or so, or frankly get poached/start your own fund. To many this sounds like PE anywhere, but its much tougher in Asia, where it's all about relationships and seniority.
You won't be a local. India has developed to a certain extent where there are plenty of people with the basic skills to do IB/PE. Note - I didn't say they were any good. Locals will treat you as an expat or differently, and that's who you will work with/around. You mention you aren't fluent in Hindi. How quickly can you get up there. Sure most entrepreneurs and bankers and teammates will speak English and often well, but what about when you do your diligence and are in the middle of deserted Uttar Pradesh or whatever? The cultural, linguistic and execution challenges are nothing to sniff at, seriously.
Sure visiting India is great and hanging out with family or staying in 5 star hotels. Have you actually lived there day to day and had to execute things (forget business but just daily life?), for a lot of DD/sourcing you'll be heading to bumblef*** parts of the country which can be cool, but intense in every sense of the word. The quality of professionals, DD etc is much lower than that in HK/SIN and much much lower than London/NYC.
Also, if you don't like it, how do you get back? You'll be seen as an Asia/India person. Once again, going back to my question above in what you want in life. If you really want to, you can try pre-MBA and get it out of your system. Some folks do that, then get into whatever MBA and then pivot back out of India that way.
I haven't even gotten into the social/regular life part of things. Making friends should be fine but there will be cultural differences, food will be delicious though not the diversity you are used to, dating may be impossible given cultural differences (unless you get into the right crowd and even then its a very small and incestuous one).
It can be a great and amazing move and this post probably sounds negative and discouraging. That's not my motivation. It is to stress that such a move won't be easy (however hard you think it may be, multiply that by 3), and if you are not ok with being there long term, I would give it a very very hard thought.
Good Luck
Can I DM you?
Only thing I would say is that dating will not be hard at all. If you are an Indian American that is at least 5 8, you will be shooting fish out of a barrel and will be a very attractive option.
Actually true lol
Thanks for the super thoughtful response.
Hey man, would you mind Pm'ing me? I am in a similar spot to you and have been considering PE in India. Would love to connect.
Pm'd
What about non-branded funds like rare who's rakesh jhunjhunwalla. Any insight to those kinds of shops?
You mean insider trading? I thought he manages his own money. No institution worth its salt or any actual operational DD process would ever give guys like him money.
That is not to shoot down on him but guys like him will not have understandable processes or transparency or anything like that. Sure if you are some family and want to punt India, that might be a great solution. Also remember working for a guy like that means that it is HIS show and so the pay/treatment/lifestyle will probably reflect that.
Maybe I am wrong, but that is the general case in this business, especially Asia.
As someone who works in the US but interned in India for a summer (also Indian descent), a few thoughts:
1) Langauge - knowing a little hindi/urdu is a bit tough. I also come from a similar background where I came to the US when I was two years old and my native language is broadly hindi. However, I am fluent and at native speaker and can speak two different dialects (Banarasi and Awadhi) and at least from what I saw, the seniors did a lot of their work in whatever native language the companies they spoke to was (Marathi, whatever dialect of Hindi is in the area, etc.)
2)Comp - on an absolute basis if you want to return to the US its tough. The seniors there earned around 1-2 crore (10-20 million rupees) which is USD 120000-240000, and it obviously scales down from there. Now for the north american folks, to maintain the lifestyle that most folks with a 150k-300k USD lifestyle in NYC have is probably closer to 50000INR a month which is 700 USD a month so the quality of life will be great. But, you may be pressed on savings if/when you decide to move back to the U.S compared to peers.
Idk man, everytime u go to finance forums and CFA forums there are swarms of indian dudes begging for advice to get out of india and do PE in the states. Do u rlly want to do it?
Done some investing in India. You'll find a lot of companies with both strong EBITDA margins and high topline growth - good example is the National Stock Exchange of India, has something like 60% EBITDA margin and insane top-line growth YoY.
The issue for India is always the exit and liquidity. Your base case LBO in North America is 4-5 years, but for India you better anticipate holding for 10+ years of exit options dry up. For VC, I know of people that have been stuck in companies for 15+ years. It's just not a very liquid market so be prepared to also take some hefty haircuts if you need to get out of a company quickly.
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