Conversations about venture capital, private equity, long-term investing, and business-building in Africa, Asia, Eastern Europe, and Latin America. The Portico Podcast is produced by Portico Advisers, LLC, and is hosted by Portico’s founder, Mike Casey (on Twitter @mcaseyjr). Visit www.porticoadvisers.com to learn more and subscribe to our monthly newsletter.
12. Gopal Jain on India’s Transformation
In today’s episode I speak with Gopal Jain, co-founder and Managing Partner of Gaja Capital, one of the leading private equity firms in India.
It was a real pleasure to speak with Gopal because he’s lived through the boom-and-bust cycles within India’s private equity industry, so he’s able to place today’s environment in context, and impart some of the hard-earned lessons he’s gleaned over the last two decades.
Gopal and I cover a lot of territory in this conversation, so I’ll spare you the rundown of topics. But I’ve been marinating on two of the things that Gopal said since our conversation.
The first is that a couple decades ago, upwards of 80% of India’s most talented engineers and entrepreneurs were migrating to the United States; whereas today, most are choosing to launch startups within India, with the benefit of a robust private markets supply chain of capital at-the-ready.
The second is that Gopal thinks that India’s PE industry could grow from $50 billion in deals to $100 billion over the next five to 10 years. And if that happens, he thinks India could detach from the EM complex and become a standalone market like China.
I was also really enamored with Gopal’s “5+1” construct for explaining the foundational infrastructure that is accelerating India’s digital transformation.
One of the things we didn’t talk about — but I think you should know about — is the Gaja Capital Business Book Prize, which has some great suggestions to add to your bookshelves. I’ll be adding a few volumes to mine.
My audio came out a bit odd in places, so I apologize if it’s a bit distracting. The good news is I don’t speak much.
There’s so much food for thought in this episode that I don’t want to keep you waiting any longer.
With that, I hope you enjoy my conversation with Gopal Jain.
This podcast was recorded in November 2021.
Learn more about Gaja Capital and its Business Book Prize.
Follow Gaja Capital on Twitter.
Bain & Company, India Private Equity Report 2021.
Bain & Company, India Venture Capital Report 2021.
11. Is Sustainable Investing Dangerous?
This episode of the Portico Podcast features a conversation with Tariq Fancy — the former CIO for Sustainable Investing at the ~$10 trillion asset manager BlackRock.
He’s also the author of the delightfully thought-provoking essay The Secret Diary of a ‘Sustainable Investor’.
I reached out to Tariq after reading his essay because it raises some uncomfortable truths about the explosion of ESG-related products across public and private markets.
While I agreed strongly with his writing about the nonsense of ESG-related investments in stock and bond markets, I maintained that sustainable- or impact-focused investors in private markets could drive meaningful change.
I also wanted to think through whether the so-called ‘greenwashing’ effect changes with scale.
I know managers whose investments are driving positive environmental and social change in some of the most underserved markets — indeed, some have been featured on the Portico Podcast.
And honestly, I worry that the asset-gathering activities of large-cap firms will not only crowd out the earnest players trying to increase human dignity, but also tarnish the idea that private markets investing can be a positive-sum enterprise.
I also worry about the proliferation of service providers bilking people with asinine accounting and compliance solutions — a phenomenon that famed corporate finance professor Aswath Damodaran refers to as the ESG Gravy Train.
I remember reading an article in the FT over the summer about PwC looking to hire 100,000 people to provide ESG advice and thought the madness must stop — we’re creating entire categories of jobs that inhibit the flow of capital to productive users of financing.
And we all know that scale providers can absorb these costs, thereby entrenching their market position and reducing competition from new entrants and smaller firms.
So, you can see why I was keen to speak with Tariq about these issues, as well as the roles the public and private sectors can play in solving the structural environmental and social challenges of climate change and inequality.
But we also talk about Tariq’s nonprofit, Rumie, which should resonate with listeners of the podcast.
Rumie provides free digital education to learners in over 176 countries, including Afghanistan where one of their big initiatives is to create more content in Dari and Pashto so that women and girls can continue their education despite the return of the Taliban.
I’d encourage listeners to visit Rumie’s website. And, if you’re a fund manager or institutional investor who’s interested in supporting the growth of a nonprofit in the edtech space, reach out to Tariq and say hello.
This podcast was recorded in October 2021.
Read The Secret Diary of a ‘Sustainable Investor’.
Learn about Rumie and sample some of its bite-sized lessons.
Donate to support Rumie’s mission.
Follow Tariq on Twitter.
Read Aswath Damodaran’s post on The ESG Movement: The “Goodness” Gravy Train Rolls On!
10. Simon Clark on The Key Man
This episode features an interview with Simon Clark, a reporter at The Wall Street Journal and the co-author of The Key Man — the summer’s must-read book about Arif Naqvi and the downfall of The Abraaj Group.
Most listeners and followers of Portico will be familiar with the background of the Abraaj story. But if you’re not, I’d recommend that you go back and listen to Episode 8.
But even more, I’d recommend you purchase a copy of The Key Man for yourself (USA, UK). It’s an absolutely riveting book; it has the pace of John Carreyrou’s Bad Blood, but with an unbelievable cast of credulous characters who fell for a fantasy.
In today’s conversation, Simon and I discuss:
The origins of Abraaj, some of its early transactions, and the oft-asked question: where did they get their money?Abraaj’s acquisition of Aureos and how it unlocked the firm’s ability to scale.The manufacture of social capital — the people and firms who testified to the greatness of Arif and Abraaj, seemingly without conducting an ounce of due diligence.The Karachi Electric deal.The $6B mega-fund.The promise of impact investing.The necessity of greater transparency in private equity.And much more.I had four pages of questions for Simon, so we clearly didn’t get to everything on my list — and candidly some of the unasked questions may be better over a pint.
But do yourself a favor and grab a copy of the book.
I hope you enjoy the conversation.
This podcast was recorded in July 2021.
Buy The Key Man | USA | UK
Follow Simon on Twitter.
9. The State of EM Private Markets
An interview with Greg Bowes, Co-Founder and Managing Principal of Albright Capital
One of the questions I’ve often pondered since founding this business is: is emerging markets private equity dying?
That literally was the name of the first study I published when I launched the company in 2016, and I — perhaps naively — thought that drawing attention to some of the industry’s problems might catalyze people to action.
To put some figures on it, between 2010 and 2015, the number of growth equity funds achieving a close had declined by more than 30%, and fund vehicles greater than or equal to $1 billion in size grew from 40% to 60% of all capital raised.
So capital was consolidating in fewer, larger managers — mostly in Asia — while at the same time the number of first-time funds holding a final close had been declining by 10% each year. And the development finance institutions were exacerbating the trends, committing to more Funds IV+ than to Funds I, II, or III.
Did things change?
Suffice it to say that last October I put out a newsletter that reframed the question to: is EM PE dead?
So, I wanted to bring on someone who could speak to the state of EM private markets.
That guest is Greg Bowes, Co-Founder and Managing Principal of Albright Capital — a global investment firm with expertise in special situations, infrastructure, infrastructure services, and real assets.
The label ‘variant perception’ gets bandied about quite a lot, mostly as nonsense. But Greg has a different view on EM private markets than most of the managers I’ve met, and I thought he’d be a great guide to walk through where the industry is in the summer of 2021.
In today’s conversation, Greg and I discuss:
Should investors even be investing in EM private markets?The impact of currency depreciations on performance and whether investors should hedge.The shortcomings of the traditional approach to EM private equity and whether it magnifies the impacts of adverse cross-currency movements.The problem of herd behavior.The importance of sound deal structuring in EMs.And much more.I’ve included some additional readings in the show notes, so dive in if you’re keen to learn more.
I hope you enjoy the conversation.
This podcast was recorded in June 2021.
Learn more about Albright Capital at https://www.albrightcapital.com.
Portico Advisers resources referenced in this episode include:
Is Emerging Markets Private Equity Dying?Is EM PE Dead?The Mid-Market SqueezeThe Evolution of Private Equity in Emerging Markets
8. The Abraaj Fiasco
I wanted to experiment with a different format for this episode and share my writings on the Abraaj fraud scandal as they were happening in real time a few years ago.
Now, for those who don’t know Abraaj, it was one of the largest — and probably the flashiest — private equity firms dedicated to investing in emerging markets. It was spearheading a big push into impact investing and was marketing a $6B fund when it collapsed in insolvency under allegations of fraud.
There are a few reasons why I wanted to revisit my articles:
First, the founder of Abraaj — a man named Arif Naqvi — had been fighting a battle in UK courts to avoid extradition to the United States. He lost that fight earlier this year.
Second, there’s a book coming out in July called The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale by two reporters at The Wall Street Journal — Simon Clark and Will Louch. I’m keen to bring them on the podcast to discuss the book and I wanted to provide some context in the hopes that one or both of them will join me in a few months’ time.
Third, the Abraaj story is a useful prism for seeing the world as it is — unvarnished. As you listen, I encourage you to think about how social capital, branding, and reputation are manufactured; how an industry that talks about due diligence did little to none; and the credulity that money buys.So, there will be four parts to the story I share today. The first three were from the February, March, and April 2018 editions of Portico’s much-beloved, monthly newsletter, Portico Perspectives.
The final part comes from the July 2018 edition.
As noted, this is an experiment, so please let me know what you think about the format and content.
This podcast was recorded in April 2021.
Sign up for Portico Perspectives.
7. Viktor Shvets on The Great Rupture
In this episode of the Portico Podcast I speak with Viktor Shvets, a global strategist at Macquarie, and the author of the deeply thought-provoking book The Great Rupture, which investigates the past and interrogates current trends to probe the question: do we need to be free to be innovative, prosperous, or even happy?
You know, when I started this company, I laid out three philosophical principles for its ethos: intergenerational equity; value creation > value extraction; and intellectual curiosity — particularly a belief in the importance of contextual and interdisciplinary thinking and open exchange.
As you’ll hear, Viktor’s comments deftly navigate these three principles.
You may want to grab a pen and some paper to take notes for this episode because Viktor is a polymath who will engage your brain in some important — and at times, unsettling — thought experiments.
In today’s conversation, Viktor and I discuss:
Why he wrote a book that looks for lessons in the 12th to 15th Centuries to guide us through the next two decades;Whether the ‘operating system’ of open markets, property rights, and open minds that generated prosperity in the past is in retreat — and even if it were, would it matter;The confluence of the information revolution and financial revolution, and how these two forces are hollowing out the core frameworks of society;The state’s usurpation of the free market and what it means for capitalism and commercial banking;The prospects for emerging markets in an era of de-globalization and the importance of non-tradable sectors across EM; We even talk about Andrew Yang and the possibility that universal basic income might liberate people from scarcity, and empower them to live lives of their choosing.But there is so, so much more.
This is a good companion to my interview with Tom Burgis in Episode 4 on The Rise of Kleptocracy, and the topic of corruption comes up a couple times in this episode, so you should check out Episode 4 if you haven’t already.
And I’ve also included links in the show notes that will point you to a few additional readings that Viktor and I discuss, including some of my own writings over the last decade that have marinated over some similar themes.
I hope you enjoy the conversation.
This podcast was recorded in February 2021.
Learn more about Viktor and the book.
Buy The Great Rupture at Amazon, Barnes & Noble, IndieBound, Waterstones.