Skip to main content

Interview with Raja Kumar of Ascent Capital


Raja Kumar, Founder & CEO of Ascent Capital

The growth capital focused PE firm Ascent Capital, recently invested Rs.150 crore in Hyderabad-based IVRCL Assets & Holdings. Earlier in 2010, Ascent had co-invested (with Argonaut and IDFC) into the energy arm of the GMR Group. Venture Intelligence spoke to Raja Kumar, Founder & CEO of Ascent Capital, about the latest investments and other developments at the Bangalore-headquartered firm.

Venture Intelligence: Can you tell us how the IVRCL Assets investment came about and what attracted you to the company?

Raja Kumar: Our internal research flagged water and road infrastructure assets as an attractive area to invest in during the fund life of our current fund. With the streamlining of regulations and good visibility of the upcoming road pipeline, the road segment is poised to grow. Water infrastructure is another promising area given the demographics of India. We dug deeper into these sectors and identified players whom we believe would be successful, IVRCL A & H was at the top of our list.

IVRCL is a proven player with significant experience and execution capabilities. They already have excellent assets in the Road and Water BOT space. The Company has the ability and balance sheet strength to raise capital at both the project and holding company level. They also have mature assets which they can easily divest to annuity type investors. Companies such as IVRCL are valued in the market at a multiple of book value and we have confidence in their ability to grow their book.

VI: What are you expecting from the company in the near future – in terms of use of the new funds, etc.?

RK: Majority of the new funds raised would be used to fund existing infrastructure projects. The company is also bidding on Road and Water BOT projects - we expect them to win some of the ultra mega road projects and water infrastructure projects given their experience in executing the water desalination plant in Chennai. To diversify the portfolio of projects, the company is now focusing on projects for power transmission, hydropower and oil tankages.

VI: Will Infrastructure continue to be a key investment theme for Ascent? What other sectors within infrastructure appeal the most to you?

RK: Infrastructure will continue to be a key investment theme for Ascent. Any fund that is looking to invest in India cannot ignore the infrastructure segment. The 12th Five Year Plan’s outlay of USD 1 trillion for the sector will drive investments. Other sectors within infrastructure that interest us are power, ports, logistics, urban renewal, etc. besides the companies that provide feeder services to infrastructure companies.

VI: Other than infrastructure, what are the other industries you are looking at actively?

RK: We are looking at sectors driven by domestic consumption such as Education, Healthcare, Managed Services, etc. We are also actively seeking opportunities that leverage the global competitiveness of the Indian industry such as IT/ITES, Aerospace & Defence Electronics, Pharmaceuticals & Life Sciences, etc.

VI: In Fund I and II, you had a significant number of investments in the IT space. What is your reading of opportunities in the IT & ITES industry now compared to earlier?

RK: We have done well with our IT investments in our previous funds and it will continue to be a focus area for our fund. Earlier, there were number of opportunities in the early stages, but now most of the opportunities are in roll-ups, management buyouts and platform development. Whereas the first phase of growth was driven by outsourced services this phase will be driven by product companies both in the software and hardware realm.

VI: What sectors will you stay away from?

RK: We stay away from real estate and other negative sectors such as alcohol, firearms and tobacco.

VI: Ascent has clearly stated its preference for growth capital. Why are you staying away from buyouts and distressed types of deals?

RK: Although we have a preference for growth capital, we are selectively looking at management buyouts and distressed opportunities. Even in growth capital we have always owned significant stakes in our portfolio companies and have been instrumental in setting the strategic direction of the company.

VI: What is your view on doing PIPE transactions?

RK: In the Indian markets, of the 6,000+ listed companies about 90% are characteristically akin to private companies with small revenues and profitability. Such companies need capital to grow and can be expected to produce returns comparable to those from private companies. If PE funds find cheaper valuations in the public markets than in the private markets they would prefer to do PIPEs. Having said that, I don’t think we are going to invest more than 20% of our corpus in PIPEs. Due to regulatory reasons we can do only primary investments in public companies.

VI: Your latest fund was closed in an extremely challenging environment for PE fund raising worldwide. Can you share some of the highlights from the experience?

RK: We were one of the few funds that launched and closed a fund on schedule during 2009. Needless to say it was an extremely challenging environment for fund raising. However, neither did we use the services of any fund arrangers nor did we have any special terms with our large LPs.

We are grateful to our LPs for backing us in 2009 – it was a leadership act on their part. It is interesting to note that ours was the only fresh commitment some of our LPs made during the year. Many LPs appreciated our discipline in adhering to the timeline for fund closure.

VI: Finally, you have attracted ChrysCapital founder Raj Kondur to the Ascent team. How did that come about and what role will Raj play?

RK: Raj is a welcome addition to our team and brings complementary skills. After a stint with entrepreneurship he was in touch with our team for the past 12 months. He clearly evinced interest to be part of the platform provided by Ascent Capital and help grow it to a leader in the industry. Raj will be leading investments like other partners with a special focus on control transactions.

This interview first appeared in the Venture Intelligence Indian 2010 Annual Private Equity Roundup Report

Popular posts from this blog

PE-VC investments in Q2'23 decline 33% to $9.9 Billion

Private Equity-Venture Capital (PE-VC) investments in India during the quarter ended June 2023 (Q2'23), at $9.85 Billion across 182 deals, registered a 33% decrease compared to the same period in 2022 (which saw $14.6 Billion being invested across 371 deals). The investment amount however rose 74% compared to the immediate previous quarter (which saw $5.7 Billion being invested across 181 deals), shows data from  Venture Intelligence , a research service focused on private company financials, transactions, and their valuations. The PE-VC investment figures for the first 6 months of 2023 - at $15.5 Billion (across 363 deals) - was 50% lower compared to the same period in 2022 (which saw $31 Billion being invested across 800 deals). Q2’23 witnessed 19 mega deals ($100 M+

Chiratae, Speciale and Stride Ventures win APEX'24 Venture Capital Awards

Chiratae Ventures, Speciale Invest and Stride Ventures were awarded as among the leading Venture Capital investors in India for 2023 as part of Venture Intelligence APEX‘24 Private Equity & Venture Capital awards event in Mumbai.  The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms and "crowd sourced" voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Return Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies) VC Investor of the Year Chiratae Ventures received the Venture Capital Investor of the Year 2023 Award on the back of 10 part exits totaling $178 million via Secondary Sales during the year. Its exits included those from retail unicorn Lenskart, SaaS Startup Pixis and baby pr

Blackstone, MO Alts and InvAscent win APEX'24 Private Equity Awards

Press Release Blackstone, MO Alternates (formerly Motilal Oswal PE) and InvAscent were awarded as among the leading Private Equity and Growth Capital investors in India for 2023 as part of Venture Intelligence APEX‘24 Private Equity & Venture Capital awards event in Mumbai.  The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms and "crowd sourced" voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Return Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies) PE Investor of the Year Blackstone received the Private Equity Investor of the Year 2023 Award on the back of strong complete exits during the year: from Sona Comstar and IBS Software. Ganesh Mani and Amit Dalmia, Senior Managing D

Avendus tops League Table for Transaction Advisors to PE deals in Q1'23

Aeka Advisors and Ambit claim the No.2 & 3 slot Avendus topped the Venture Intelligence League Table for Transaction Advisor to Private Equity Transactions for Q1 2023 advising 5 deals worth $808 million. Aeka Advisors stood second having advised 3 deals worth $228 million. Ambit followed with 4 deals worth $160 million. Ernst & Young ($114 million across 4 deals) and o3 Capital ($80 million across 2 deals) completed the top five for Q1 2023. Avendus acted as advisor to ADIA’s $500 million investment in omnichannel eyewear retailer Lenskart . Aeka Advisors acted as advisor to Kreditbee’s $160 million fundraise from Advent International, Mitsubishi UFJ Financial Group (MUFG) and existing investors. Ambit advised the $104 million fundraise of Freshtohome from Mount Judi Ventures, Iron Pillar, Amazon and others. The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on the value of PE

PE-VC investments fall 38% in 2023 to below $30 B

The value of investments by Private Equity - Venture Capital (PE-VC) firms in India fell by 38% to less than $30 Billion in 2023. PE-VC firms invested $29.7 Billion (across 756 deals) in Indian companies in 2023, compared to $47.6 Billion (across 1,362 deals) in the previous year, reports Venture Intelligenc e, a research service focused on private company financials, transactions, and their valuations. (Note: These figures exclude PE investments in Real Estate).                                                                                                                                                                      2023 witnessed 67 mega deals ($100 M+ rounds) worth $21.2 Billion, compared to 112 such investments worth $31.8 Billion in 2022. The $2.4 Billion investment in Manipal Hospitals by Temasek (which gained majority control) and TPG Capital was the largest PE-VC investment in 2023. This was followed by the $1.35 Billion buyout of education loans focused HDFC Credila