NAFA Capital managing director and financial wizard speaks with Kailashnath Adhikari, MD, Governance Now
GN Bureau | December 14, 2021
Covid-19 came as a rude shock and hit the world with several disruptions, halting economies and destroying livelihoods. While research for the new variant, Omicron, thought to be less lethal than Delta is under way, its emergence has raised serious concerns. However, with the economy on the rebound, Ameya Prabhu, financial wizard and managing director of NAFA Capital, feels that Omicron will not cause an adverse impact.
In a freewheeling conversation with Kailashnath Adhikari, MD, Governance Now, during the webcast of the 75th episode of the Visionary Talk series held by the public policy and governance analysis platform, the investment banker said, “Omicron will not cause economic derailment.”
However, sounding a word of caution, Prabhu said that going forward disruptions like new Covid variants, climate change and animal diseases infecting humans due to loss of animal habitats will be increasing and Covid should be looked upon as preparing us as a global economy and humanity.
“The Indian economy has picked up and growing. Markets are also doing well,” he said. However, the MSME sector is facing many challenges. “A big business is like a river that needs many small tributaries and streams which feed into it. SMEs are the tributaries that need to be strengthened,” said Prabhu.
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He said new technologies like blockchains will have to be brought in to benefit the MSME sector, reduce the cost of finance, and reduce the risk for financial institutions and banks. “The beauty of blockchains is that everything is traceable.”
On cryptocurrency, he said whenever a new form of payment is brought in there is always resistance from incumbents. But regulations need to be brought in to prevent their misuse in crime or terrorism. “Cryptos are here to stay. The problem is not cryptos, but their misuse.”
On being asked which sectors of the Indian economy will be leading the surge, he said anything related to consumers will fuel growth. There is a lot of space for new brands.
He said digital platforms for service and delivery will be extremely critical irrespective of the line of the business and infrastructure push by the government.
He underlined the importance of setting up a good team in a business and said a good sector with a bad team will always fail but a good team in a bad sector might succeed.
“Honesty, integrity, quality, depth of the team, the ability of the team to de-risk their product, not only have an IQ but also EQ are very important,” he said and added that businesses must have softer aspects of dealing with ESG (environment, social and corporate governance) with a 360-degree approach which he said is the core philosophy of his own company.
“Building sustainability-focused business is an opportunity. Key concerns will be how to build reducing our carbon footprint, how to build with ESG focus, how to build protecting tribal and indigenous resources and protecting wildlife and without drawing too much water. Businesses in India will do well. Key is the process management and having the ability to de-risk situations in the country,” he said.
Prabhu, who is designated Young Global Leader 2021 by the World Economic Forum, says, “Most businesses fail. An entrepreneur has to face many challenges and failures. He must have the ability to deal with situations when he may not only face uncertainties but also situations when he is not able to pay salaries.”
Asked if Indian investors are ready to value a future business model, he said the valuation matrix of a company cannot be the same when the company starts and when it is in a steady state of growth.
In the case of tech companies where valuations are high, he said making a profit is a problem. “Tech companies have to mature. The fact that these companies are listed is good. Markets will bring discipline, greater disclosure.”
He however said that Indian startups are maturing, they are coming of age. There will be some successes and there will be some failures. “For a listed company, a retail investor is God and should be treated like that,” he said.
His company, NAFA Capital, together with IDF Eurasia will start a US $100 million distressed assets fund. The collaboration will focus on distressed retail loans (credit card, mortgage, home, car loans receivables).
Prabhu, who started his career as a writer and gradually got into financial services, said the lockdown gave him the time to write his book, ‘The Rock Babas and Other Stories’. The book, he said, is a call for hope. It is about the need to realise that instead of fighting wars, finding differences against one another, proving one-upmanship over each other, we should identify things that unite us. The book has a positive message to unite to work together and make this planet a better place.
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