Nicolas Berggruen: Master of all trades

JUDGING BY THE NAMES of his acquisition vehicles, 49-year-old German-American Nicolas Berggruen, president, Berggruen Holdings, could easily be the activist investor or Batman of the private equity world. His latest billion-dollar fund Justice is the third in a trilogy of funds Liberty and Freedom.

Globally, he’s leveraged complicated, special purpose acquisition companies to execute three multi-billion dollar mergers. In India, his investments, which started in a clutch of startups ranging from hospitality to fleet leasing, total some $200 million (Rs 913 crore) and more is expected in the months to come. The billionaire investor says he’s here for keeps and is building for the long term. Edited excerpts:

IMPACT OF DOWNTURN ON INDIA PLAN
It sounds a little un-market driven but we don’t change our strategy because of such (market) crashes. If we weren’t willing to go through good and bad business cycles, we wouldn’t do it. In reality, the market crashes provide an opportunity to invest at better valuations and strengthen our competitive position.

ON DELEGATING
I stay informed and have ideas, but I generally rely on managers on the ground. Each team in every country has a head who is responsible for all operations and management. I’m not involved day-to-day. That’s the same for Turkey, the U.S., Spain, Germany, anywhere we are [present].

A DIFFERENT WAY
India is the only place where we do startups. Outside, we look at established brands with big cash flows which may be in the wrong hands or have the wrong capital structure and weak operations. We take them over. But in India, going that way is expensive because people pay large premiums for that and promoters tend to control too much of the business. But that said, it’s much easier to buy an existing business than to build one in India, as I’ve learned.

RETURNS FROM INDIA
Well, all our businesses are fairly long term and need scale. We’re still building them and it’s early and I wouldn’t say that we have returns yet. I look at cash flow and right now we’re investing and not taking money out. I don’t calculate future returns but we’ll talk about that in some time from now.

NEW INVESTMENT AREAS
Media in India will obviously expand ... the dominant players are already in strong hands. I’m not sure if there is room for a new one. So today, I’d be more inclined to take a stake in an existing player.

Also, I would love to be in retail. It would be No. 1 because I believe in it. It involves the Indian consumer who I believe in, it’s scaleable, and less capital intensive. Negatives are that India doesn’t allow easy foreign investments. The Indian customer is very cost conscious, which pushes margins. From what I understand, anyone who has tried is not making money. But it’s early, and I’m still interested.