Interview with Mr. Mohit Ralhan, Global CEO &Managing Partner of TIW Capital Group (TIW CG)

Global Brands Magazine was pleased to have the opportunity to interview Mr. Mohit Ralhan, Global CEO & Managing Partner of TIW Capital Group (TIW CG).

1. Can you explain what private equity is in layman’s terms to someone that’s never heard of it?

Typically, when a company makes profits, it pays a part of the profits to shareholders as dividends and ploughs back the remaining profits in the business to grow it further. A lot of times the companies are not able to generate enough profits to invest back in the business and they need additional sources of capital. One obvious source of additional capital is a bank loan. But not all companies are eligible for the bank loan, or they may not want to take debt. Private equity investors then come into the picture, who can provide this additional capital and in return get a stake in the company. This is the basic concept but, in the actual scenario, it goes much beyond providing just capital. Private equity firms, especially buyout funds like TIW Private Equity (TIW PE) also provide operating consulting, mentorship and key managerial skills to entrepreneurs drawing on their significant operating experience across industries. This is as much value for a growing or struggling company apart from the capital.

 2. What were the events in your career that led you to become the Chief Investment Officer of TIW Private Equity?

A significant learning curve across consulting, business strategy, operational consultancy and investment management across the hierarchy allowed me to develop and hone my skill set to be a successful asset manager. My professional career spans Two Decades, Six Funds and Multiple Businesses and has invested circa SGD 250 Mn in Companies with specialization in absolute return strategies, private credit, fixed income, buy-side expertise, turnaround consulting, Quant strategy, Buyout, Control Transactions, Venture / Diversified, Real Estate, Margin Expansion &Turnaround Situations across market cycles. Also demonstrated repeated success in Investment Judgement, Fund Management, Portfolio Management and Business Strategy. Exceptional Communication, Presentation & Mentoring Skills with distinguished abilities in leading teams for developing service standards for investment outcomes. Currently from Singapore, I am managing circa SGD 225 Mn AUM with Multi Asset, Multi Geography Buyout and Fixed Return Funds with an investor spread across 27 countries and handling all investment and divestment decisions made at TIW along with its strategic direction. In a career spanning two decades, invested and guided Companies across multiple sectors. Served on the Advisory Board of Companies in the interest-rate sensitive sectors, FMCG, Technology, Education, Consumption, Media, Digital Businesses, Real Estate & Manufacturing Consumption. Also served on Investment Committee of multiple Funds managed by TIW. Have awarded by The Economic Times as the “Most Promising Business Leaders of Asia” for recent 2 consecutive years in 2019 & 2020. Have recognized by the CEO Insights Magazine as one of the ‘Top 10 Best Chief Investment Officers in India“ for recent consecutive years in 2020 & 2021.

3. How many funds and/or product lines does TIW Capital Group operate? Do you prefer a diverse investment strategy or to minimize the spread?

TIW Capital Group is currently concentrating significantly on Absolute Return strategies through its Fixed Return Dollar / Pound Fund given the turbulent global macroeconomic& political environment. TIW also had Buyout Fund strategies and is actively looking at developing its Consulting / Family Office practices. Our plan is to expand as a multi-assetmulti-geography Fund house in the next 5 years. The investment strategy encompasses investing in assets that generate USD / Pound fixed annual returns in high single-digit with limited risks.

4. What kind of asset do you prefer to invest in and why? Companies or infrastructure?

Our current focus is on absolute return strategies where capital is allocated dynamically to build a multi-asset and multi-geography portfolio. The current macro environment needs a sharp focus on risk management and the same can’t be optimized through a unidimensional portfolio. Therefore, we are investing globally through a mix of several investment strategies across asset classes with the objective of generating absolute returns for our investors. In our Buyout Funds, we continue to invest in privately held companies where we partner with entrepreneurs working extensively on productivity improvements and margin expansion.

5. When investing in companies, do you prefer to invest at seed level, or do you seek a level of maturity?

Given the global macro-economic situation, we look at companies that are in sectors that are giving a positive return on equity and can generate significant free cash in a limited time frame or short term. We are agnostic to the stage of the level of maturity of the organization.

6. What are the green flags you look for in a company before making an investment?

Five manifestations / green flags we look for in a company before making an investment.  They are:

• Companies with Succession Planning Issue.
• Companies with High Debt where TIW can deleverage the balance sheet.
• White Knight Opportunity.
• Companies with Inferior Execution or Fraud essentially Governance Arbitrage.
• Build Vs Buy Opportunity, i.e., Greenfield / Brownfield opportunities through Joint Venture route.

7. What are the red flags you look for to know when to avoid making an investment?

The red flags which we look for to know when to avoid making an investment during due diligence are:

• Creative Accounting
• Management Integrity
• Stubborn Management
• Poor margin profile of the sector
• Company focuses on growth and not on profitability (especially in current times)

8. What does TIW do better than other private equity firms?

Typically, in PE Strategies across the globe, returns for the investors are back ended. TIW PE has come out with a balanced approach wherein the returns are a combination of dividend payouts on a quarterly basis to the extent of 1.5% – 2% in dollars, i.e., 6 – 8%-dollar dividend payouts and equity upside in a realistic time frame of 5-6 years unlike other funds typically have 8-10 years mandate. We have essentially done this through the following. Most of our investments also lead to the removal of debt in companies. One of the rules that we strongly believe is that the companies should have zero debt. This improves the outcome of the businesses and in creasesits ability to withstand macroeconomic disruptions like the one we witnessed in 2020 due to the outbreak of the COVID-19 pandemic. This has helped our companies to survive multiple recessions and steer employment sustenance.

9. What recent technological trends are likely to have the most impact on private equity in the next decade?

The core belief and competence of TIW is to drive automation in every horizontal of the organization with an intent to drive cost leadership. Like the 17^th century was the century of the industrial revolution, TIW believes the renaissance of the 21^st century is technology. Technology will impact the way deals are sourced, evaluated and negotiated. The fast-paced evolution in data management and analysis will immensely aid our decision-making process. It will also increase deal flows and shorten deal cycles. It will also transform the investor relations and reporting functions. Private Equity Funds are investing heavily in their own technology infrastructure, and we have taken the lead by developing a unique technology platform that gives our investors any time anywhere access to all data about the Fund, their investments and the performance of the portfolio companies with a click of a button.

10. Congratulations on your company’s Award win. Would you like to share a few words on this?

I am humbled and thank Global Brands Magazine and every stakeholder of TIW, professionals and my family members who have been involved with me in my journey.  We are glad that TIW is selected for this award and recognized globally which gives me and my team an immense pleasure and a great motivation to become better in whatever we are doing.

11. Where do you see your company in the next 5 years?

We are Currently managing circa SGD 225 Mn AUM with Multi-Asset, Multi Geography Buyout and Fixed Return Funds with an investor spread across 27 countries. Our specialization is in “Margin Expansion” & “Turnaround Situations” with ‘Zero %’ Loss Ratio at the Fund level on Principal amount. We currently have presence in Singapore, Dubai and South Asia (India). In 5 years, we will expand our presence to multiple countries to become a Global Investment House managing assets in multiple countries from multiple locations.