Welcome to our ‘Fund in Focus’ series where we profile our member funds, underscore their investment philosophy, and highlight some of their interesting work. Today we speak to Ashish Kotecha of Bain Capital. In this feature he throws light on how the fund’s global platform, deep expertise in key sectors, and focus on creating value through a dedicated group of experts – help to challenge conventional thinking and drive growth.
FUND IN FOCUS: Bain Capital's Winning Formula Combines Expertise and Rigor in Investment Decisions
Ashish Kotecha, Partner and Head of Asia Private Equity Portfolio Group, Bain Capital
1. How would you describe the investment philosophy of Bain Capital?
Founded in 1984, we pioneered a consulting-based approach to private equity investing, partnering closely with founders, families, and management teams to offer the insights that challenge conventional thinking, build great businesses and improve operations. Over time, we have organically expanded this approach across asset classes to build one of the strongest alternative asset platforms in the world.
Our primary objective is to be the partner of choice for great companies as they grow. We help companies improve their competitive position by expanding into new products and markets, growing productivity, and strengthening their operations. Ultimately, we believe our growth-oriented model results in stronger companies that employ the best people, are socially responsible, deliver strong returns over the long-term, and create lasting impact in the communities in which we live.
This value-added approach to investing is supported by our global platform and our deep expertise in key vertical sectors, including healthcare, consumer/retail, financial and business services, industrials, and technology.
2. Given India’s improving macro-economic situation, tell us more about the firm’s strategy to deploy capital in this geography across asset classes
We started our Mumbai office in 2008 with a combination of existing Bain Capital professionals and experienced investors in India to integrate localized insights and relationships into our global investment approach. We have grown to become one of the largest private equity teams in India with 15 investment professionals.
As a platform, we have invested in more than 25 companies in India, and partnered with a host of different founders, families, corporates, and management teams. We have helped these businesses expand into new products and markets, strengthen their operations, and positioned them for long-term success. We remain very excited about the opportunity here and are looking actively to increase our deployment in India as we continue to pursue high-conviction investments across our core sectors – consumer / retail, financial and business services, technology, industrials, and healthcare.
Thematically, we are looking to build on our experience base and differentiated set of operational resources to provide founders, families, and management teams with flexible solutions to professionalize and grow their companies. While we look for companies that are well positioned to drive growth over the long-term, we are also uniquely set up to invest in situations that involve performance turnarounds, complex corporate carveouts, platform buildouts and large-scale mergers.
From an asset class perspective, we partner with our Special Situations team to provide a greater range of capital solutions. They invest across the capital structure in India, bringing together credit, equity, corporate, and real asset expertise.
3. In what ways does Bain Capital contribute to the growth and development of the companies it invests in?
Bain Capital Private Equity pioneered the value-added approach to private equity investing. We were among the first private equity firms to establish a dedicated global portfolio group staffed with operating and strategy professionals who partner with management teams. This group has 75+ people in it today and includes several specialists who act as advisors to each of our portfolio companies across functional areas like Capital Markets, Talent, Digital, IT, Financial Controls, and Supply Chain to name a few.
Our portfolio group, in conjunction with our investment professionals – most of whom come from strategic consulting backgrounds, form a collaborative team that enables us to create lasting impact for our portfolio companies and helps them reach their full potential.
These integrated deal and portfolio teams work with companies on strategic, operational, and organizational topics helping ensure differential focus and execution on a highly prioritized set of value creation levers.
4. Few years back PE firms looked at ESG related issued from a risk management perspective; whereas now they look at ESG and sustainability as a key value driver. Illustrate how can PE firms ensure success with ESG value creation?
We think holistically about returns and believe that ESG and value creation are intrinsically linked. We start with a strategic, fact-based and diligence-driven investment approach that by definition includes a multitude of environmental, social and governance (ESG) considerations.
Post investment, we engage with our companies in five key areas where we believe our impact can be the greatest – Active Governance and Stewardship, Sustainable Growth & Reducing Climate Impact, Fair Employment, Engagement & Well-being, DE&I and Community Engagement.
We believe that good ESG practices in these areas lead to better investment outcomes while considering the firm’s broader impact on the environment and society.
5. How does Bain Capital approach due diligence and risk assessment when evaluating potential investment opportunities in India?
We invest when we have high conviction that a business is in a structurally attractive industry, where it is addressing crucial industry or market issues with a sustainable competitive moat, and it is led by a highly capable and motivated team.
We arrive at our investments by leveraging deep global vertical expertise / themes, with high analytical rigor and practical perspectives from our portfolio group. Over the last several years, we have also built a real center of excellence in our global macro team, who provide critical context setting that allow us to invest across market cycles in an increasingly complex global macro environment.
6. Quite a few of the deals of your deals are in BFSI and IT & ITES. Will these sectors remain high on your focus?
Absolutely – each of these industries enjoys compelling long term structural tailwinds. Having invested in over 7 BFSI /IT ITES companies, we also have a differential ability to diligence and support companies in these industries.
We have been through cycles in these industries, worked extensively ‘in the trenches’ helping these businesses grow and, finally have successfully exited many investments. Lots of lessons learnt and insights developed that gives us continued confidence to invest in these industries.
In fact, we have invested in 2 new deals in these sectors over the last 12 months - CitiusTech – a leading healthcare focused IT services company, and in 360One – one of India’s leading wealth and asset management firms.
7. You have fully exited JM Baxi this year. How do you see the Infra/ Logistics space going forward in terms of opportunities?
There are several tailwinds driving the infra/logistics space – including a real acceleration in demand for consumer and business products, the government’s ‘Make in India’ initiative that has spurred a wave of capacity additions, and a global push to diversify supply chains.
As an active investor globally in industrials, we will actively look for opportunities that fit our value-added investment approach.