If we have invested $2 bn in last 12 months, then $10 billion in the next 5 yrs not ambitious: Bain Capital’s David Gross-Loh

The private equity executive who led some of the largest buyouts for Bain Capital, such as the $20 billion buyout of Toshiba memory chip business, rebranded, later as Kioxia, believes India has the potential to show the highest growth in GDP, in the next 12 months, anywhere in the world. “Despite some headwinds on trade imbalance and current account deficit, India’s macro-economic situation is improving and is poised to structurally improve further with the China plus one strategy and the manufacturing push via PLI type programmes,” said David Gross Loh, Managing Partner, Bain Capital for Asia.

That gives a firm like Bain Capital an opportunity to deploy capital across asset classes – private equity, real estate, credit, special situations, structured financing, distressed debt and even venture or early stage investing. “If we have invested $2 bn in last 12 months, then $10 billion deployment in the next 5 years not ambitious,” he told ET in an exclusive interaction.

Loh, a Bain-consultant-turned-PE rain maker, believes India is fast catching up as global corporations adapt to a diversified global supply chain beyond China. He argues, some countries in Southeast Asia were the first to benefit, but mainly that was because they already had plants on the ground. So it was about taking their capacity utilization from 70% to a hundred percent and maybe building a bigger plant where one already existed.

In contrast, India built fresh capacities – new buildings, new facilities. “Some countries in Southeast Asia, that infrastructure was already in place and so was the government support for capital intensive industries and like semiconductors. Malaysia and Singapore for example have had pretty well developed government subsidy and support programs for semiconductor facilities. People do realise India is a huge market in its own right. So unlike many of the Asian tigers that thrive on exports in India you could be making for both India as well as the world.”

The Production-Linked Incentives, or PLI scheme — the centerpiece of Prime Minister Narendra Modi’s economic strategy of self-reliance — is a potential game changer feels Loh that is slowly catching on to the imagination of global CEOs. At a five-year cost of $24 billion, it’s an ambitious industrial policy push that — just like US President Joe Biden’s Inflation Reduction Act — is seeking to galvanize private investment in a mix of industries — auto manufacturing and textiles to solar, battery and semiconductors, with the goal of creating new jobs and a whole lot of follow-on prosperity.

“It is a well-funded programme that the government is committed to and is focussed on hi-tech and manufacturing companies. So yes people have taken note and there is a chatter. But these are early days. Many are commitments and some have just broken ground just as we speak, right? . If you just extrapolate the commitments, there will be a meaningful lift on virtually everything starting from GDP to jobs. And new ecosystems will get built.”

The electronics sector could be a case in point. According to Amit Chandra, Chairman, Bain Capital India, as per the firm’s estimates, India is going to leapfrog from $18-$20 billion to $80 billion over the next 5 years, and that number, based on all the commitments, could go up 4-5 times over the next 5 years. “These are quantum shifts that we are seeing, which will actually spur very interesting opportunities and will bring down the trade deficit. Oil and fertiliser are the two headwinds that can upset the maths but then again oil is coming down though gas prices are high and are negating the gains,” said Chandra.

Bain has been investing in India since 2008 across sectors like auto to financial services to pharma, tech services. “Ever since we started here, we have had a pretty clear set of the industry sectors, and the types of opportunities. We also focused on those which were really good fits with our model that leverages our industry expertise, are global platform deals like Genpact and

. We have preferred deals where you needed to have strong local presence, the ability to work closely with Indian management teams, but we could help them expand their global operations and help them expand their global sales,” said Loh.

Many would argue Bain has had mixed results in its listed company bets especially in financial services. The stock of L&T Finance has inched up only 11% in 7 years.

, where Bain put in over a billion dollars and led a consortium in what was then the largest such transaction in the country too had seen its stock severely hammered among private lenders during 2020-2021. “While we would have liked to see it do better, we have done fine since we sold a small portion our stake in L&T Finance for most of our investment value long ago. Axis we came in at sub Rs 600/share. Now it’s around Rs 750. Importantly the bank is growing its book value in the mid-teens and seeing strong growth,” argues Chandra. “From the point of our entry to the point that we are today, the fact that these companies actually leveraged the capital that we infused, managed to survive a Black Swan event, actually standing today with a much higher ROE, a much greater, you know, capital adequacy ratio. We must not forget that both these investments were hit by a black swan event in the form of Covid, which impacted the financial services sector the hardest.”

The focus is now to widen the engagement says Loh through credit, special situations among others. Bain is raising a new $5 billion APAC fund, and also a new distressed asset fund for its JV with Piramal – India Resurgent Fund. Sources in the know say, fund 2 will be close to a billion dollars compared to the $650 million fund 1. “The new bankruptcy code and all infrastructure around, that is relatively new has made it all a transparent process, a more streamlined process and is going to provide for a greater flow of actionable opportunities than what we’ve seen in the last five years,” said Loh, also a trustee at the Berklee School of Music. It’s a large economy. We’ve got the capital base and the people.”


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