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SAIF Partners: The low key funds that delivers steady returns

February 14, 2012
It is difficult for an interviewer to get more than monosyllables out of Ravi Adusumalli at any time. Prod him some and all he comes out with is: "We let our returns speak for themselves."

{table}And speak they do. SAIF Partners, of which Adusumalli is Managing Partner and Head of India Operations, is likely to deliver 4x on its investments in India over the past decade. Its multi-bagger has been an investment in travel portal MakeMyTrip, which listed on the Nasdaq at a valuation close to $1 billion in 2010 and will generate returns between 15x and 20x on an investment of $25 million. "We have exited 20 per cent of our position. Given the strength of the team and increasing Internet penetration, we will be long-term shareholders," says Adusumalli. SAIF stands out for what one investor calls "discerning deals".

SAIF's portfolio companies are as effusive as Adusumalli is reticent. "If Ravi is offering you money, then it is a blind pick. He is more fun than any investor could be," says Vijay Shekhar Sharma, founder of One97, a mobile Internet company. Travel search firm iXiGO's Aloke Bajpai was introduced to SAIF by Deep Kalra, Chairman and CEO of MakeMyTrip, and was surprised when an $18.5-million deal was signed in double-quick time. "We completed all the formalities very quickly - within weeks," he says. MakeMyTrip too invested in the deal.

{table}Adusumalli sees no point in overanalysing the financial numbers for a start-up. "If it fits in with our investment thesis and we like the entrepreneur and his team, we do not take too much time," he says. SAIF is short for Softbank Asia Infrastructure Fund, a name it held in an earlier avatar.

The speed and flexibility is highly valued by start-ups. Sharma of One97 remembers that just when he was considering a second round of funding, SAIF offered a bridge loan that could be converted into equity at a minor discount when the next round finally happened.

"We were in expansion mode and getting that $2.5 million six months ahead of time was good." In 2010, when One97 started generating positive free cash flows, Sharma considered investing in early stage, new technology companies. While he had $5 million in mind for a seed fund, SAIF helped him scale up the idea into a $100-million One97 Mobility Fund.

Ravi Adusumalli, Managing Partner
Given the strength of our management team and increasing Internet penetration, we will be long-term shareholders: Ravi Adusumalli
For all its speed, the team does not take short cuts and goes through a seven page-long check list. Partner Vishal Sood says the big check boxes fall under four heads: management team, a business fit, room for growth and the right price. "We look for a good management team on whose honesty and competence we can depend. We do not invest for three to six months and flip our transactions," says Sood. Like others in the private equity business in India, SAIF is not averse to investing in the public markets during times of market disruption. In the aftermath of the 2008 crisis, the team invested in Thermax, and when it exited in 2009, SAIF made returns of over 200 per cent.

At its Gurgaon office, the SAIF business is divided into early stage and Internet-e-commerce investments in one bucket and growth investments in the other. Adusumalli and his team work on the first, while Sood and another partner Deepak Gaur focus on the second. One recent addition is CFO Vivek Mathur. If one team member has led a transaction and closed the deal, he holds the primary responsibility till the day the last share is sold.

"Though we are from diverse backgrounds, we have similar values," says Adusumalli as an explanation for the low public presence of the team. "We typically avoid the papers and we have no PR agency." Flying below the radar has worked well for the team so far, but that may be tougher with success.


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