January 2016 | Sangeeta Menon

'Singapore is a key market for us'

Set up in 2008 to explore opportunities in the private equity and investment banking businesses in Singapore, Tata Capital Pte started relatively small. The company, which began with fund management and soon followed it up with corporate finance business, has embedded its roots firmly in Singapore’s financial landscape. In an interview with Sangeeta Menon, J Niranjan, CEO, Tata Capital Pte, retraces the company’s growth trajectory and its future plans.

Tata Capital Pte was set up in 2008 to explore opportunities in the private equity and investment banking businesses in Singapore. Has the focus changed since then? 
The primary focus areas for Tata Capital Pte continue to be what we had initially set out with. We started with the fund management business and followed it up with the corporate finance business. We have separate subsidiaries for both businesses.

The private equity business is the main reason why we are here and it is a high contributor to the revenue. On the corporate finance side, we originally thought we will focus on M&A business between India and Singapore. That was the primary idea when we started, but in the light of the slowdown in the Indian economy we shifted our focus to local businesses. 

We have always aimed to play a pivotal role in getting more Indian companies to invest in Singapore. It is not really a business area for us, but an attempt to increase interaction between Indian companies and Singapore.

How would you describe these last seven years? Considering the intense competition in the financial sector in Singapore, how easy has it been for Tata Capital to find a foothold here?
Singapore is a key market for us and is our international headquarters. Our growth here has been well on track. The private equity business has being doing quite well despite the fact that our commencement of business unfortunately coincided with the onset of the global financial crisis. We set up two funds one after the other: the Tata Capital Growth Fund and the Tata Opportunity Fund. We followed these up with a healthcare sector focused fund. Of the total of about US$1 billion that is being managed by Tata Capital, approximately US$750 million has been raised from international investors; the funds of these international investors are being invested through the fund that has been set up in Singapore.

Interestingly we were one of the first funds to opt to set base in Singapore, rather than the (then) more conventional Mauritius route. Today we understand that a majority of international PE investments into India are through Singapore-based funds. 

Once we had set up these funds, we spent the next three years or so focusing on investing the money we had raised. That cycle is now coming to an end. As we look forward to fresh fund raising, we are confident that given our track record it will be a good experience.

Where investment banking is concerned we had to adapt our plans. When we started off, we wanted the corporate finance advisory business to be a cross-border model. However, that did not scale up as planned and we eventually refocused on the domestic advisory business.

What plans do you have lined up for the company over the next few years?
Over the next 12 months, we will focus on investments and successful profitable exits of our earlier investments. We continue to evaluate new fund themes and shall look to raise money for the follow-on funds for some of our existing funds. From an investor point of view, the acceptance of our funds would be higher today because we have demonstrated performance. At a broad strategic level, the fund management for private equity has been a success story here and hence, we would like to expand that.

On the investment banking front, we hope to ramp up our cross-border advisory business, in addition to growing our existing Singapore business.

Do you anticipate that a majority of the funds will come from Singapore?
Going by the past, I would say 75 percent of the money would be foreign money, from international investors across geographies including Japan, Korea and the West.

Tata Capital Pte had a plan to build an India-Singapore corridor. Is that still on the agenda?
The India-Singapore corridor is a big opportunity for us. Clearly, I am looking at it from an advisory point of view and it is an opportunity we want to tap. But it is still early days. We are still at the first stage, where we are providing advice to local SMEs looking for investment opportunities in India. I believe that for a year or so it will just be limited to giving advice and hand-holding.

This interview is part of a special report on Tata group's presence in the ASEAN region, featured in the January 2016 issue of Tata Review:
Overview: Foothold in ASEAN
'Singapore is the nodal country for ASEAN', KV Rao, resident director for ASEAN, Tata Sons
'We want to encourage global innovation', Vinod Kumar, managing director and CEO, Tata Communications
'We learn a lot from this market', Girish Ramachandran, president, TCS APAC
'NatSteel will focus on sustainable profitability', Ashish Anupam, president and CEO of NatSteel Holdings
'Singapore is pivotal to our ASEAN growth', Anish Raghunandan, vice president, East and South Asia, Tata Technologies
'This year looks set to be a record year', PV Balasubramaniam, CEO, York Transport Equipment (Asia)
'An asset-light strategy is our preferred path', Dinesh Shastri, managing director, Tata NYK Shipping Pte
'We will consolidate our business here', Alfred Egli, head, minerals vertical, Tata International Singapore Pte
'Our opex costs are industry benchmarks', SS Varma, vice president, operations, Trust Energy Resources Pte