DE Shaw scaling down India private equity business

Last Updated: Sat, Nov 10, 2012 04:12 hrs

Six years after it had launched its private equity (PE) business in India, the DE Shaw group, one of the world's largest hedge funds, is scaling down its India operations.

The PE’s India managing director, Anil Chawla, who had been overseeing its operations in the country, has resigned. He would now be working as a consultant with the firm, shifting his base to Hong Kong.

A DE Shaw spokesperson confirmed: “Anil is no longer an employee of the DE Shaw group, but he will continue as a consultant. He will remain a director of our private equity subsidiary that invests in Indian companies.”

Chawla was not reachable for comments.

It is understood that Gurgaon-headquartered DE Shaw India has pruned the number of its investment professionals from 15 to only two, who will now operate out of a business centre and oversee the exit of its remaining portfolio. Sources say it has also decided not to make any fresh PE investment in the country.

When contacted, a spokesperson for DE Shaw in the US said: “We are still invested in private equity in India. While our business is smaller than earlier and we have fewer people, that is a reflection of the changed investment climate, not our long-term interest in investing in India.”

DE Shaw has invested in India from its global pool. It had, at its peak, made investments of $2 billion in the country. However, in the past few years, it has exited many of its key investments and currently has a portfolio exposure of around $400-$500 million, which it will look at exiting.

The company had entered into the country in 2006 by taking a 15 per cent stake in Crest Animation Studios for around Rs 40 crore.

It has invested in many key sectors, including education, renewable energy, real estate, publication, animation, broadcasting, outsourcing and security services.

Its sale of 36 per cent stake in DLF Assets Ltd (DAL) in 2009 for $500 million was its biggest deal. In one of the most profitable deals in the real estate space, especially when the sector was facing a downturn, DE Shaw sold its investment in DAL, owned by the K P Singh family, at a 40 per cent profit over the $400 million (Rs 1,866 crore) it had invested in late 2007.

With a strong concentration in the media space, DE Shaw also invested in Amar Ujala Publications Ltd, but got into a bitter legal battle with the promoters. It also exited Afcons Infrastructure and Gemini Industries, among others.

However, Chawla had, in an interview last year, talked about newer areas where the hedge fund would focus. These could be hospitals, renewable energy, agro processing industries and education, he had said.

DE Shaw also has a 50:50 joint venture with Reliance Industries Ltd, announced in March 2011. The new venture has earmarked various areas of business, including investment banking, asset management and stock broking.

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