Amit Rathi says about Safe Investment Options
Family-run businesses have once again emerged as safe investment options, said Amit Rathi of AnandRathi Brokerage. This is precisely because family-run businesses make for easy, stable and resilient investments.
Family-run businesses are attractive also because they have been tried and tested over a period of time and have survived the changing business environment.
Another reason cited by funds to pick family-run businesses is because they are in established brick and mortar businesses where there is greater assurance of steady returns as compared with some of the new economy sectors.
“Family-run businesses are more resilient than professional peers. They have lower cost structures and operate in stable industries, have lower attrition rates and pursue long-term strategies,”said Adi Godrej, chairman of Godrej group while speaking at the Family Business Conclave organized by the Indian School of Business (ISB) in Mumbai.
Amit Rathi, managing director of Anand Rathi Financial Services, said, “ Almost 90% of private equity investments made by our company would be in family-owned businesses as there are few widely held companies such as Larsen and Toubro Ltd in India.”
“80% of our investments are in family-run businesses,” said Sanjay Nayar, chief executive officer of KKR India Advisors Pvt. Ltd (KKR), an arm of Kohlberg Kravis Roberts and Co. LP.
KKR India has invested about Rs.17,000 crore so far to 55 companies including GMR Holdings Pvt. Ltd, Avantha Group and Apollo Hospitals Enterprise Ltd, which are all family-entrepreneurial ventures.
Roughly half of the funds that Apax Partners India has invested is in companies associated with large promoter families such as the Reddy family-led Apollo Group, the Murugappa Group, the Piramal Group and the RPG Group.
The only problem with family owned business is when there ensues a dispute in the family, leading towards splitting of assets.