Warren Buffett once famously remarked, “Only when the tide goes out do you discover who’s been swimming naked.” The legendary investor was speaking in the context of equity investing, but it is as applicable to all investments made during a time of plenty. While many a deal in the private equity space has delivered an excellent return, several have gone awry as well. During the 2007 boom, the industry saw its share of irrational exuberance. The usual sins followed: too much capital chasing few good businesses and heightened optimism leading to distorted fair values and rosy forecasts.
Predictably, the outcome has been not so pleasing. Many private equity investors are now desperately looking for buyers for their investee companies. The pain is more acute as many funds are nearing the end of their fund-life without having shown a decent return.
In our cover story, associate editor Kripa Mahalingam writes about the challenging times faced by private equity investors today. But like all proverbial clouds, this too has its silver lining. Even as some investors are busy placating their principals, there are others who have let go of creature comforts to venture out on their own. Backed by a track record, they have raised a fairly decent corpus and are busy deploying it.
In other stories, we have a take on Marico’s decision to spin-off Kaya. It seemed like a great idea when Marico decided to enter the skincare business many years ago. After all, vanity is recession-proof and the young and the indulgent were expected to play ball. But the bottom-line has not played out as planned. After constant nudging from institutional shareholders, promoter Harsh Mariwala has finally cut Kaya loose. The story on whether Kaya will exhibit radiance from now .
Another interesting piece is on the rising popularity of western musical instruments. Guitar, drums and synthesisers are replacing sitar, tabla and harmonium. While it’s sad to see the slow death of Indian classical music, the market for western instruments is growing by leaps and bounds. Find out which companies are making merry, here.
