Business Today – August 25, 2019

By RASHMI PRATAP

ILLUSTRATION BY AJAY THAKURI

here’s a recurrent theme in ace investor Warren Buf-

fett’s communications to shareholders of his holding com-

pany Berkshire Hathaway – a disdain for private equity

(PE) firms. From accusing PE firms of charging unrea-

sonable management fees to alleging that they are “lying a

little bit to make the money come in”, Buffett is one of the

biggest critics of PE investors.

Before 2016/17, Indian promoters too felt the same way.

“Bringing them onboard is akin to signing a slavery bond,”

the CFO of a large auto component firm had once said.

That perception is changing. With the economic slow-

down hurting earnings of companies, traditional sources

of capital drying up and debt rising, PE firms are now the

only silver lining for cash-star ved Indian companies. Once

confined to funding smaller promoters, start-ups and IT

firms, PE investors are now getting board seats on some of

India’s top tier companies, including government-owned

entities. And they are here to stay.

Canadian investment firm Brookfield Asset Manage-

ment has inked a deal to invest `25,215 crore ($3.66 bil-

lion) in Reliance Industries’s telecom tower assets in the

WHITE

KNIGHT

OR GREAT

WHITE

SHARK?

In a fund starved market,

private equity firms with

oodles of cash are stepping

in to pick up anything they

can. But there are dangers

34 IBUSINESS TODAYIAugust 25 I 2019