Mumbai: The Indian private equity industry has witnessed two major exits with Jayesh Desai, co-head of Piramal Capital’s Structured Investments Group (SIG), and Aluri Srinivasa Rao, managing director for India at Morgan Stanley Private Equity, deciding to quit their respective firms, according to at least two people aware of the development.
“He (Desai) had put in his formal resignation around a couple of weeks ago. He might take some time off before deciding his next move. The group (Piramal Enterprises Ltd) is looking at an internal promotion to replace him,” said one of the two persons, requesting anonymity as he is not authorized to speak to the media.
With the group’s plans to demerge and bring all the financial services businesses under one roof, a lot of internal restructuring is happening and that may have triggered the move, he said.
Desai is likely to move into an operating role again, said the second person cited above, also requesting anonymity.
An e-mail sent to Desai did not elicit any response.
“Jayesh Desai will still be involved with the business in the capacity of a consultant. The SIG business will fold into the financial services business, which is led by Khushru Jijina,” said Piramal Enterprises in an e-mail response.
Rao, on his part, said that he has quit Morgan Stanley and plans to go on a year-long sabbatical.
“I plan to travel, volunteer my time, spend more time with friends and family, explore new technologies, and tick off some (items) on the bucket list,” Rao said in an e-mail.
“The idea is also to use the time to firm up my mind on what I would like to do next,” he added.
“Aluri Srinivasa Rao has left the firm,” confirmed a Morgan Stanley spokesperson in response to an e-mail seeking comments on Rao’s exit.
In 2012, in a trophy hire, Ajay Piramal-controlled Piramal Capital, the financial services arm of Piramal Enterprises, brought in Desai, a chartered accountant by qualification, to lead its newly formed Structured Investments Group, or essentially to invest out of the firm’s cash-rich balance sheet.
Piramal Enterprises (earlier Piramal Healthcare) struck a blockbuster deal in May 2010 to sell its domestic formulations business to Abbott in a staggered transaction worth $3.7 billion. Since then, the cash-rich group has been investing in new businesses besides deploying cash in various assets.
Prior to joining Piramal, Desai held senior positions at companies such as Unitech Infrastructure, Coca-Cola India, Enam Securities and Ernst & Young. Largely a financial services professional, Desai has been a veteran in the private investments space and was also internally referred to as the “go-to” man and someone with a “close access” to Ajay Piramal.
On 18 May, The Economic Times reported that on the heels of the decision to demerge the financial services and healthcare businesses of Piramal Enterprises, the group is planning to bring all of its finance entities under one roof, including those of the Shriram Group, in which Ajay Piramal is the single largest shareholder.
Desai had big plans. In a July 2015 interview with Mint, he said that Piramal Enterprises planned to invest Rs.10,000 crore from its structured finance group in infrastructure and other sectors over the next few years.
In April 2015, the group hired Shantanu Nalavadi from private equity fund New Silk Route Advisors Pvt. Ltd to spearhead structured investment deals. Desai’s mandate then shifted to looking after transactions in the infrastructure space.
Piramal’s SIG division invested Rs.615.5 crore in two cement firms, buying non-convertible debentures (NCD) of Sanghi Industries Ltd, the flagship company of the Ravi Sanghi Group, worth Rs.265.50 crore, Mint reported on 21 April. The firm also invested Rs.350 crore in NCL Industries Ltd, the owner of the Nagarjuna Cement brand.
Other investments made by SIG include a Rs.500 crore investment in Green Infra, an alternative energy company, and Rs.425 crore in Navayuga Roads, according to the company’s website.
As for Rao, a private equity veteran, he moved to Morgan Stanley Private Equity from ICICI Ventures in 2008 to help the US bank set up its private equity business in the country. In 2014, Morgan Stanley raised about $1.7 billion for its Asia-focused fund Morgan Stanley Private Equity Asia IV LP.
Rao did not necessarily have a great run at Morgan Stanley. One of its earliest investments, a $36 million funding in Biotor Industries, an integrated manufacturer of castor oil and castor derivatives, was essentially a write-off as promoters siphoned off the money.
Its last known investment was the fund’s participation in a $210 million round of funding in small finance bank Janalakhsmi Financial Services Ltd.
Under Rao’s watch, the fund has made nine investments in India in companies such as Asian Genco, Continuum Wind Energy, Hathway Cable & Datacom and Indus Concessions amongst others, data from Venture Intelligence shows.
The fund has made only two exits so far in India, from IHHR Hospitality and Hathway Cable, Venture Intelligence data shows.
Indian private equity has seen lot of churn. It has been characterized by a wave where a host of private equity professionals broke out from established organizations to set up their own shops.
The list includes Heramb Hajarnavis of Kohlberg Kravis Roberts & Co (KKR) who is setting up his own fund Sea Link Capital Partners, and Mahesh Parasuraman of Carlyle and Sunil Vasudevan of India Value Fund Advisers, who are setting up their fund Amicus Capital Partners. Limited partners (investors in private equity firms) have largely been critical about these moves, calling them a “breach