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Dalal street was
never like this — anonymous, faceless fund managers who sit in front of lifeless
grey screens and move millions of dollars in and out of the market with the
click of a mouse. Up until the advent of the FIIs, it was a place where the
market makers were referred to by colourful pseudonyms. It was place where big
brokers had distinctive trading styles and clear preferences for certain stocks.
It was time when ‘buy bank’ meant buy SBI stock, when ‘sell cement’ meant sell
ACC. It was a time when knowing the market meant knowing when Ramjibhai would
come and buy in to support Bajaj Auto. It meant you knew the target at which
Manekbhai would exit the stock. Legends were made and destroyed. Harshad Damani,
Kayan, Ketan Parekh, Nimish Shah were men who dictated the market.
Though times have changed, and today the market movers have been replaced by
jargon spewing technical chartists, who look at shoulder and neck patterns to
determine when to sell, hold or buy. The market movers of yore have given way to
a global mercenary — the omnipotent hedge fund.
And yet in this
universe of the anonymous trader there is one man who has carved out an identity
of his own. In the cacophony of a trading room, at the peak of market hours,
when somebody whispers Rakesh bhaiyya has entered a stock, all ears perk up.
Every trader in the room scans his screen to see what’s happening with the
stock. There is a sudden urgency to find a research report on the company
concerned. And no one rests till they can understand what Rakesh Jhunjhunwala
has seen in this hitherto obscure stock. Soon theories are floated, rationale is
assigned and tales are woven around Mr. Jhunjhunwala’s stock selection. There’s
just no denying that like the pipe piper, wherever he goes there will be a host
of traders following in the hope that they can bag the next ‘chakri’, or
multi-bagger.
Bhaiyya is what
everyone calls him, out of respect or fear is anyone’s guess. He is not an easy
man, has a quick temper that can easily turn into rage. He is tall and well
built with a voice so authoritative that it could well belong to an army
colonel. Mr. Jhunjhunwala is aware of his reputation and some say that he even
uses it to his advantage. However, ask Jhunjhunwala and he will tell you that
like all good traders, he tries to keeps his trades discreet. He trades on his
own screens or with brokers whom he trusts.
Mr. Jhunjhunwala is
modest about his success and says, “The daily trades made by me are not as big
as people make it out to be. In fact it’s not even a noticeable percentage of
the daily volumes. It is the foreign funds that control the volumes these days.”
The hallway of his office is filled by portraits of legendary traders including
George Soros and his 10 commandments for trading and investing. Famous
quotations pepper all corners of his office. And he himself has coined some
pretty well-known one liners like Jaldi le aur jaldi de — buy fast, sell
fast.
And while that
might be his best-known quote, the truth is that he can be patient. Very
patient. Some of the investments he has made years ago, and continues to hold on
to them. If he believes that he can play an active part in changing the future
of a company he is willing to spare the time and take a board seat. However, at
the end of the day, he is a man who trusts his gut. Investment theory might
demand discipline and control for a good trader, but Mr. Jhunjhunwala is
passionate, impulsive and aggressive. And he is not willing to change
that.
Legends evolve
over time, and today Mr. Jhunjhunwala too, is moving into the world of private
equity. Despite four screens on his table, he spends more time and most of his
profits investing in unlisted companies. Over the past one year, he has moved
his money into 14-15 privately-held companies. Some of which are pure start-ups.
So, the big question is — can Mr. Jhunjhunwala bring his Midas’ touch into the PE
space as well? He thinks he can and is putting his money where his mouth is. In
his new avatar, he has hired two consulting whiz kids — Manish Gupta and Rajiv
Agarwal — to manage his PE investments. It cannot be called a fund as it is part
of the overall portfolio of investments owned by Rare Enterprises.
So how much money
has he pitched into this arena? Mr. Jhunjhunwala is wary at putting a number to
his total unlisted company investments. When we push him, he says a conservative
estimate would be Rs 300 crore, but it could be as large as Rs 500 crore. And
that does not mean that he is done as he says, “I don’t have a target for
investment, we just look at the opportunity and the valuation and pick up a
substantial stake.”
So how does he
structure his PE investments? He says that he would like to take a 10-30% equity
stake on an investment ticket of $10 million and more. And any particular
sectors that he sees potential in? He says that it’s difficult to peg the sweet
spots for his investments, given that they have been made in companies like the
school management firm JBCN in Mumbai to a bio-fuel company Nandan Biometrics in
Hyderabad. He has invested in Care Hospitals in Hyderabad and in Dharti Dredging
& Constructions, which has been in the business for more than 50 years. The list goes on with Mumbai-based KLT Automotive to Pegasus Asset Reconstruction, a
company promoted by AK Basu, ex-IDBI, and William DeSilva, ex-SBI Capital
Markets.
Most enterpreneurs
seek investment from Mr. Jhunjhunwala because he can help them take their
companies public. But he does not see going public as the end-game. “If the
company is good enough then it will go public, but there is no hurry. I don’t
have to report to other investors about how my companies are doing.” He is
helping his investee companies to recruit professionals, acquire land and get
clearances. To him this is more than just a percentage gain, but the opportunity
to help entrepreneurs realize their dreams.
Says Mr.
Jhunjunwala, “When you invest at such an early stage, you develop an emotional
attachment to the companies. After all you are working with people. Their dreams
and desires are linked with your investment.” If all goes well, Mr. Jhunjhunwala
might well do something that no other legend of Dalal Street has ever done —
become the only ‘bhai’ who has been successful both as a trader as well as a
private equity investor. Then he could change to buying quickly and selling
slowly.
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Courtesy : Economictimes.com |
copyright: Keynote Consultancy P. Ltd