Our friend the other day asked at dinner, "Why do you all write a newsletter at AltG?". He added that as builders and entrepreneurs, a newsletter makes sense where we discuss trends, markets and our insights into the Indian economy. Shouldn't we only be interested in writing about our own business? He added, "Isn't a weekly newsletter what investors do to discuss their various investments?". Those were interesting questions from someone we went to business school at Wharton with. The answer, however, was simple. Our newsletter is our way of sharing our entrepreneurship, business and operational experience with everyone and anyone looking to build, invest and operate in India in the 21st century.
We're Builders First, But Capital Allocators Too
Let's elaborate a bit more on the above. As Builders of businesses, we've never viewed the operational component as separate from the balance sheet of our business. We've never viewed what happens in one corner of Noida (A part of the greater New Delhi Area) as different from the news about the FED from Jackson Hole, Wyoming. In fact, as builders of businesses and entrepreneurs, we've viewed both sides of the balance sheet to be intricately linked with both micro developments in India and the greater macro big-picture global movements. In a highly interlinked global economy, the ability to understand our operations in the context of both the financial parameters of our business and the big picture has helped us create value and generate a high return on the capital we've invested into businesses.
Building Businesses & Creating Value In Many Shapes And Forms
As Indian businesses evolve, how companies are built will be crucial and varied for those building businesses in India. What we mean by this is different types of businesses need different types of capital providers to succeed. We've seen too many good operators not value the right capital structure, and we've seen too many investors invest in a business with the wrong return horizon and expectations. Much of what we write is to assist investors and operators in learning the right process for selecting business partners and investment partners in India.
We've been fortunate to have had extensive experience operating in India's retail, healthcare, real estate and aviation space as hands-on getting our-sleeves-up operators. We even constructed a factory from the ground up, from land acquisition to the last automated security system installed there. But, we were equally privileged to have spent time as financiers in a past life. These two diverse experiences give us a unique lens into doing business in India.
Suppose you're building a cold-storage business in India. In that case, you're probably looking for some equity and some debt structures that allow flexibility and then looking to earn a healthy rate of return above the benchmark. But, surely, this isn't a space for raising venture capital, where the equity needs rates of returns and growth that a cold-storage business can't deliver. And, yet, we've seen this happen over the last five years. As we said, we look to share information that removes asymmetry and opens up the India opportunity to the global investor base.
India Doesn't Have A Mature Private Market!
If we got a dollar for everytime we heard this, we'd be billionaires. In fact, on the contrary, India has a very mature private market, with the top 30,000 private companies in India generating over $1 Trillion in revenue and close to $100 Billion in EBITDA. One primary purpose of our newsletter was to dispel the notion that India's private markets aren't ready for global capital. In fact, the real opportunity in India's private markets lies in platforms that can allocate capital in clips of $10 to $50 Million. India's private markets are where software private equity was at the start of the century—a mega market there for the taking.
The Importance Of Capital Allocation
Another crucial aspect of Building Businesses In India that we've wanted to highlight through our newsletter is something we, as builders and entrepreneurs, hold as very important - High-Quality Capital Allocation. As the Indian economy evolves and India sees rapid growth and sophisticated strategy, the importance of capital allocation will be of prime importance. We see significant value creation opportunities for businesses and investors via top-notch capital allocation as industries transform, profit pools move, and new industries emerge. The ability to use your balance sheet more effectively, invest in adjacencies more cleverly, generate a high ROIC for your shareholders, and horizontal integration focused strategies that unleash value will all be significant value creators and wealth generators in India.
Our newsletter aims to share our experiences and learnings to help businesses build better and investors invest better in India. As the G20 summit occurs in Delhi next week, it's fascinating that almost 80% of the hotels hosting our friends from across the globe did not exist 30 years back. Nearly 50% did not exist in 2010. That's the transformation of the India growth story - A story that needs global partners to flourish with!