The Bollywood star who launched a family office
Vivek Anand Oberoi, Bollywood actor and chair of Oberoi Family Office, which he started 9 years ago, divides his family investments into two camps: “steady and sexy”.
The steady 60% of his family’s wealth is invested via a range of funds and managers, mainly in equities, with a heavy weighting to India. The sexy portion – the remaining 40% – is Oberoi’s personal focus, to which he today devotes his working life when he is not acting.
A large chunk of this is funnelled into quick-turnaround private equity opportunities with companies sourced and managed by Oberoi himself and a small team (he also runs a separate venture funding operation, with investments of up to seven years, and a portfolio of direct real estate investments).
He has between 6 and 12 investments live at any one time. the typical investment period is between 12 months and 24 months and the average deal size for these investments is around $10m, of which between 25% and 50% comes from Oberoi himself.
"Over the last five years, the lowest return on a single venture we have made is 180% and the highest was 356%," he said.
NEVER SOLO
Oberoi always invests alongside others, preferring entrepreneurs he knows, including friends from his Bollywood career or other family office investors that he has met since formalising his family office structure.
“I never go in solo; I want a group of like-minded investors that I am comfortable with, with a shared ethos in positive social impact,” he said.
Oberoi concentrates on family businesses where ownership or control is passing from the older to the younger generation, where the company needs capital to scale quickly and where Oberoi himself can play an active role advising family members through the transition.
“When that next generation is coming through, they are bringing back learnings from [education in] the US or the UK. We’re looking for something that made good money, but has a start-up flavour to it, is potentially scalable, and is open to new ideas, so you can marry best practice-tech into that growth,” he said.
Oberoi’s personal involvement is integral to his investment in a company. “I think that’s important when you’re trying understand the cultural fabric of a business and how it impacts its social environment,” he added.
Aged 46, he often falls between the two generations involved in the businesses he owns, putting him at an advantage in facilitating communication between them, he says.
“I put skin in the game, show belief in the family, and I’m speaking to the 60-year-olds and to the 30-year-olds and both [generations] end up calling me ‘Bhai’,” he said, referring to the Hindi word for big brother, also used as a term of endearment or respect.
INDIA’S MSME MARKET
Oberoi has focussed on India’s huge micro, small and medium enterprise (MSMEs) sector, which collectively accounts for 30% of the country’s GDP and 40% of exports, according to government figures.
“There are 68 million SMEs in India with little or no debt, decent assets, a good track record of profitability and the potential to grow on the back of the rising economy,” he said. “The domestic market is so big and the delta is so quick and the impact you can have is exciting.”
Returns are made via listing the companies on one of India’s two major SME platforms – the EMERGE platform on India’s National Stock Exchange, NSE and BSE SME, the platform of BSE (formerly called the Bombay Stock Exchange).
The relatively small investment amounts place him in a universe of opportunities that falls below the radar of the majority of private equity companies, at companies earlier in their life cycle, which can grow more quickly. Working with a small team, he is nimbler than institutional competitors, he said.
“The traditional network of deal sourcing employed by private equity companies only focusses on companies that have emerged. They are looking at the butterflies, I’m with the caterpillars. And the big institutions are highly structured, with the board and the investment committee and so on, they don’t have independent decision making.”