Future Of LP-GP Dynamics In India

Given the changing social and economic landscape, the structure of investments and partnerships has to be relooked for better returns. General partners (GP) have been the backbone for PEs, the pace of technological adoption has forced GPs to pay attention to valuations, risk mitigation practices as well as more transparency to Limited Partners (LP) more frequently. 

While speaking about the current trends in the insurance segment, Mihir Vora, Senior Director and Chief Investment Officer, Max Life Insurance said, "Insurance companies can not invest in public listed companies, most of their investments are in private listed companies. The co-investment piece becomes tricky for us. However, in the last couple of years, we have started encouraging funds that start showing active co-investment opportunities."

To look at the past records, pedigree and portfolio of a venture are some of the major parameters to be evaluated well before infusing the capital. The alignment of their structure and synergy with investors' vision is also critical. 

Precisely touching upon the performance of the fund, Prasun Gajri, Chief Investment Officer, HDFC Life mentions, "Funds which have performed well in the past tend to perform well in the future as well. You have to look where in my portfolio this asset class fits in." Experts, additionally, emphasise the need to diversify across the funds so that the different investments in different vintages would be able to recycle the returns.

"Investing in venture capital (VC) funds is a new game for us as a bank. The way we are structured, there are multiple parts of the bank that come together and decide which fund to invest in. Banks will continue investing in equity. We will see more action in space and we will see more banks coming in," said Neeraj Gambhir, Group Executive Treasury Marker and Wholesale Banking Products, Axis Bank.

Kapil Mantri, EVP and Head, Corporate Strategy and Merger and Acquisitions, Jindal Steel and Power said that the world changes very quickly. What you are doing today is interesting. Will it be equally interesting in ten years? I would rather put capital in VCs than play that field.

This insightful conversation was taking place at IvyCap Day 2022.