CORPORATE LEADERSHIP
Kapil Modi: PGP 2008 (Managing Director & Partner, Carlyle India Private Equity)
Kapil Modi is the Managing Director & Partner, Carlyle India Private Equity. He was involved in $4.5bn plus investments across 15 deals by Carlyle in India and has managed 5 full exits with more than $4.0bn of realisation through strategic sale, IPO and public markets. He was part of several successful deals such as SBI Cards, SBI Life, Yes Bank, Cyient, Tirumala among others with a total portfolio footprint of more than 100,000 employees and market cap of more than $25 billion.
Kapil won many prestigious awards like AVCJ Exit of the Year Award in 2022, VC Circle Investment of the Year Award in 2022 and IFR Asia Award – Best High Yield Bond Issue of the Year in 2021.
Kapil’s contributions extend beyond the corporate realm. He received Carlyle’s Global Diversity, Equity & Inclusion (DEI) Award and is the only member from Asia who is part of Global DEI Council at Carlyle. His focus on promoting renewable energy and sustainability goals at portfolio companies demonstrates his commitment to sustainability. He has served on the boards of many companies like Hexaware, Nxtra, PNB housing finance, Visionary RCM, Newgen, VLCC and many more. Kapil has also made a few angel investments to support young entrepreneurs in firms like Townscript, Sensehawk, Redsky and others.
Congratulations on winning the YAA award. Welcome back to the campus. How does it feel to be here?
It feels great. Just getting an admission into IIMA was one of the highlights of my life. To be back on campus is a privilege, and I have always enjoyed that. Over the last 16 years, whenever I have got an opportunity, I visited the campus. To be given an honour like this by the very eminent Institute in the country, its a real proud moment for me and my family. I feel really great. I’m very thankful and grateful.
How has IIMA shaped your career?
IIMA gave me three things. One is the confidence I did well academically here, and it gave me the confidence to spread the wings and go out in the world. So that was the first thing. Second thing is the network I work in private equity, which I say is a bridge between capital and talent. And I gave me the network of hugely talented people all across the world, not just India. So that really is a lifelong asset that I got. And the third one is the career launchpad. I got my first job out of campus, and I am still in that job after 16 years.
Looking back at your journey, what are the key lessons that have guided you?
Lot of the lessons that guided me came from the institute. Institute has a very high emphasis on ethics and integrity, and it is in practice, not just in words, and that kind of resonated very well with me, because that is very much in line with the family values that my parents taught me. So the advice, “Always do the right thing, even if it is the tough thing”, has held me in very good state, because I deal with a lot of stakeholders and regulators and multiple other stakeholders including external stakeholders, management, founders. When you treat everybody the right way, when you do the right thing even if no one is watching, resonates extremely well with my organisation where I work.
The other one was hard work and sincerity. I think I’ve been in the same organisation for 16 years and they are the fuel for that compounding. So that’s the other lesson that I really value. And the third thing that has really helped me is just being kind and helpful. When I got out of campus in March 2008 after the Global Financial Crisis, a lot of people had to switch jobs, {they] went through a lot of transition, and the fact that you kind of were with those people in those tough times allowed you to build long, lasting friendships and true friendships, which mean a lot beyond words. So I have always felt that it’s a good thing to do the right thing, be kind and helpful, and the world returns it to you multifold.
Can you talk about a specific deal that you remember that was challenging and how you navigated that challenge?
I will talk about the first deal that I did, it’s really close to my heart. I was a very junior guy in Carlyle 2010. The client was a company called Tirumala milk products, founded by four rural entrepreneurs based in Narasaraopet of Guntur district of Andhra Pradesh. I spent 3-4 weeks in the peak summer heat of Guntur in this village, tallying their accounts, looking at all the data because they had never done this. They were very much ground-up entrepreneurs. One guy was a farmer, one guy was a loader, and they had just started and built it out of sheer grit and passion, but did not have adequate systems. They used to manage all their financials in excel sheets, in pen drives, believe it or not. And it was a 400-500 crore business. When I went there, I did the diligence, I could see the value unlock. We partnered with them, and we were able to deliver 4.5 times the value for Carlyle in 3.5 years. But during this journey, I ended up building all the systems; we could get yesterday’s PNL today in that system, and we did the second largest ERP implementation in India after Amul in the dairy sector. Then I hired a junior of mine from PGP ABM who had done NDRI [National Dairy Research Institute] Karnal, and management from IIMA and I got him all the way from Gujarat to Guntur to run this project for us. He did amazingly well and continues to be with that organisation. After many years, we ended up building systems where farmers could get paid on time and receive an SMS every day on the amount of milk supplied and the value that they deserved to be paid, way back in 2010. We opened up around 0.5 million bank accounts for those farmers who insured cattle insurance for their cattle. So I felt good because we created a reasonably good amount of value for our investors. We created value for those rural entrepreneurs, and we created value for everybody in the ecosystem, the farmers, the employees and everyone. We ended up selling this company to the largest multinational dairy company like Tallis, and ran the entire process. So it was a very good, happy journey where I could see that you can create value for all the stakeholders.
So what would be your advice to somebody who wants to be in this career in private equity?
I would say, focus on two things. One, the table stakes, which is the financial analysis, ability to do valuation, ability to do negotiation. But the second part is the software aspect, ability to build a network, ability to have people trust you, right with large amounts of capital, with the careers and all of that, and ability to manage large stakeholder relationships, because as a board member in publicly listed companies, you are responsible for minority public shareholders.. As a regulated entity, you are responsible for the regulators to take care of the do the right thing, even if it is the hard thing. I have served on various regulated entities boards, I would say that there are times when the decision may not seem fiscally the most exciting, but if it’s the right thing to do, do the right thing in the long-term. So I tell people that give with the right set of ethics, integrity, do your hard work and have the basic skills. And this is a relatively fast growing industry. The industry will need large amounts of talent. So even if somebody doesn’t get the opportunity right out of college, they can get into consulting or investment banking, build 2-3 years of foundational skill set and then get into this industry.
As a recipient of this Young Alumni Achievers Award, what do you aim to achieve professionally and personally?
From my perspective, [the award] bestows upon me an added responsibility. I say this with a feeling of gratitude and responsibility, both personally and professionally. From a professional perspective, I think I owe it to the Institute which has trusted me with this award to create a much larger impact on people around not just in the limited financial sense, but in the wider social sense. I have been doing this and I will continue to do, and the way I see it is that it kind of gives me an opportunity and a responsibility to become a better version of myself every single day. On a personal side, it’s very gratifying, it was a great moment.. My whole family came, it was a proud moment for my family especially my daughter, Myra, who is a bundle of joy and happiness.
