OldVet’s Question
I’ve always suspected longtime reader OldVet of consorting with foreigners. Sadly, my worst fears were confirmed just now, when he sent me this e-mail:
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This morning I got the following email request from an entrepreneurial young Indian businessman from New Delhi :
“Greetings from somewhere over Azerbaijan . I am on my way to Germany for a trade show and as a sign of gratitude for spending over $100,000 on tickets I was upgraded to the luxury of Business Class affording me an opportunity to read some of OldVet’s email and also let some of my creative juices flow.
For years I have been trying to figure out how we can offer our on-the-ground agribusiness marketing and development situation of India to the big boys – to folks with the investment money. I have spent almost 15 years doing consulting now but the money frankly is chicken feed. The money is in equity and people who can advise folks in picking equity. [Attaches an article from WSJ titled “The India Hot-Funds Quandry” of 2/4/2007, saying that financial talent available to foreign investors is in short supply.]
They key here is understanding our core capability. My partner Mr. A. and I jointly understand what is happening in the food and grocery sector. Till a few years ago it was basically what isolated investments are happening and where these would lead India as a country. In the past few years the situation has changes drastically. Due to the onset of big-time retail planning to come online – everyone is forcibly having to develop supply chain-linkages and makes investments upstream and downstream (and side-stream!). Venture money is there for the asking and equities are hitting the market big-time as you know only too well.
The questions is what can we bring to the table. We have a unique ability of being able to help folks sort the wheat from the chaff. We know what would work and what will not. We know mind-set of entrepreneurs who are developing these ventures. We understand their business practices (mostly no corporate governance standards) etc. In addition we observe, understand, analyze and appreciate change and how things fit together. That is always what has differentiated us in India – or ability to apply lessons from development examples from around the world to the Indian context.
My submission to you is that based on all this background experience we can offer a niche service to funds looking for opportunities in food and groceries and related businesses. The information would be high quality and not easily found in India . What we lack – MBAs and related jargon which would let us come to Wall Street and sell ourselves. I know you are retired now and don’t want to work too hard – but this is right up your alley. Please let me know your thoughts on this. “
I replied immediately:
“ Now you’re talking! Let me put my thinking cap on. I had some ideas within minutes of your email and reading the article, but first ideas on what you or we can do are:
(1) Identifying merger and acquisition targets and doing on the ground evaluations for potential buyers such as Kroger, Ahold, Carrefour, Walmart, people like that. This is very similar to #2 below, but on behalf of (a) individual foreign operating companies who want to branch into India . You could even (b) hook up with foreign investment banks like Goldman Sachs, or Morgan Stanley, who have clients who want to move into India. Or (c) hook up with McKinsey and Co. or Big 4 accounting firms, who have clients who want to invest directly in India in the food business. (Money – make fees and expenses for the work, buy up shares of Indian stock or get a piece of the investment action from the buyer, and become a minority investor in the deal. You get a chance at appreciating equity.)
(2) Doing “due diligence” inspections of companies in which the big Mutual Funds might want to invest, mainly Indian companies that are already public companies selling shares in India. By this I mean a specialized consulting service in the food marketing industry, offered to foreign investors like Mutual Funds. The “clients” in this case don’t want to run companies, or make direct investments – they just want to buy or sell stock based on the condition of the Indian companies in the food industry. (Money – fees and expenses for doing the site visits and doing the management assessments, and getting a look at the financial books of the Indian firms. Also, advance knowledge that stock is going to be bought, so you can get shares early.)
(3) Representing Indian companies who are looking for a foreign partner, such as a US retailer or food processor. This is a “natural” for you! Offer to bring in American companies for talks after doing a business and financial profile of the Indian company and shopping it around to contacts in the US . (Money – daily fees and expenses, plus a fee of XX% of the investment that the Indian companies get from foreign investors. Like 5% “finders fee” arrangement, or take a minority share of the new firm’s stock.) More later, and have a nice flight. “
Question: What should I tell my ambitious young friend?
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cactus here. In response to some questions in the comment section, OldVet notes:
“[T]his is absolutely for real. This is a real guy with ambition whom we’ve known for 20 years. I taught his daughter to drive at age 11, to my friend’s horror, in Tennessee on their last visit.
What can I do for this guy, who’s a good guy?”