For Sanjay Nayar, $500 million deals are like great golf shots

I often call Sanjay Nayar an eternal pessimist on the economy but he mostly comes up right on deficits, rupee and the bears.

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Sanjay Nayar of KKR in a column for DNA Newspaper talks about his golf game, his plans for India and the state of the economy in Tee Off With Shaili Chopra

 

I often call Sanjay Nayar an eternal pessimist on the economy but he – CEO of KKR India, the Indian arm of the leading global investment firm with deep roots in private equity (PE), and prior to that, CEO of Citigroup’s Indian and South Asian operations – mostly comes up right on deficits, rupee and the bears.

 

“I told you a few years ago,” he reminds me when I get down to chatting with him about the state of the country’s financial situation. “Composition of our fiscal is more wasteful than useful,” he insists and “rupee depreciation is a pure manifestation of the current account deficit trouble.”

 

No doubt, India remains at a political and economic low and now the rupee, too, is reflecting that sluggishness. Thankfully, his golf hasn’t been as volatile as the rupee, which has lost nearly 30% in 18 months.

 

Sanjay, otherwise a tennis fanatic, takes to golf when he isn’t travelling or can convince a four ball at the Willingdon Sports Club in Mumbai that he will indeed show up at the crack of dawn. He has a long drive and walks very fast on the course and his high energy makes you wonder if he will finish the 18 holes or get distracted to do something else. He was introduced to golfing by his colleagues at Citi; but now KKR, it’s a sport he shares with his boss Henry Kravis who himself was the captain of the golf team at his college in California.

 

Golf is a long-term plan for Sanjay. A bit like the India story in which he invests the money of KKR. It’s well known that PE players enter the market when the chips are down but at this stage – in the short term – even they are wary of India.

 

“There are some obvious decisions we need to take – manufacturing policy is a weak one and nothing is possible without reviving industry. Where is the land, the factories, the jobs?” he asks. It’s a poor lie as they’d say in golf and using the wrong club will not get the ball out of the rough.

 

“Take the infrastructure story. Even if we get a fantastic government in place, we have clearly lost 3-5 years,” he cites as an example and expects little forward movement in an election year. “Power sector is crippling even the existing industry. Expect power to become more scarce and expensive as it will be diverted to rural areas in an election phase.”

 

Between better governance for the economy, fewer flying miles, a game at St Andrew’s or Pebble Beach, Sanjay’s wish-list is full up. But given how much harder it is for PE firms to hunt for real opportunities, some of these desires are likely to remain up in the air.

 

KKR is invested in India in Dalmia Cement, Café Coffee Day, Magma Finance, Aricent, Bharti Infratel, Alliance Tires and more. The next set of investments is likely to be in the range of $75 million so that KKR can focus on getting bigger deals in the bag. With $6 billion raised in their Asia fund, there is plenty to invest but getting the appropriate investment in this business environment will need much more scrutiny and prudence.

 

But when deals emerge, they can come unannounced. KKR recently acquired a 90% stake in the Alliance Tire group for around $500 million. The deal, which was earlier going slow, suddenly fell hot. Sanjay had to abandon his skiing holiday in French chalets with ex-Citi friends and rush to wrap up the deal. But then, half-a-billion dollars is no small fry. Such deals are like those great golf shots. You may get them once in a while but they stay with you and make the effort to play and practice so worth it.

 

(Shaili Chopra is an award-winning business journalist and founder of

www.golfingindian.com)

 

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