PEs hunt for CEOs at MNCs as buyouts rise

Sameet Gupte, Sanjay Purohit and Aseem Soni belong to a group of chief executives who quit their corner office at a large multinational company (MNC) this year, to join a relatively smaller entity, owned by private equity (PE) funds.

Buyout and control transactions are increasing the demand for such CEOs who can take small and mid-size companies to the next level of growth.

Purohit managing director at Levi Strauss & Co was hired as chief executive for Sapphire Foods and partner consumer and retail practice for Samara Capital last month. He will be taking charge of his new roles from July where he would be using his little over

18 years of experience across consumer goods companies including Cadbury India and Asian Paints. Sapphire Foods was set up last year by Samara Capital-led consortium of four PE funds to acquire 300 KFC and Pizza Hut stores in India and Sri Lanka from diversified franchisees last year.

“These professionals are willing to leave their successful career at large firms as the new opportunity in a PE set-up provides them full empowerment and accountability to drive rapid business growth,” says Sumeet Narang, founder and managing director at Samara Capital. “Though these professionals move to smaller businesses, the opportunity is far more challenging and rewarding.” They're usually rewarded with high incentives linked to performance.

Similarly, Sameet Gupte has his task cut out to double sales within the next four years at Servion Global Solutions. Gupte joined the customer engagement management service provider as its new CEO this month, moving from global information technology consultancy VirtusaPolaris, where he was executive vice-president and global head of financial services.

In 2014, Everstone Capital and Solmark signed an agreement to invest ~403 crore for acquiring majority stake in Chennai-based Servion.  Gupte has a track record in building IT services businesses across Asia, America and Europe. He is also credited with building successful businesses in North America and Europe for Headstrong and Genpact Capital Markets.

Everstone had another such successful hire this year when it roped in Aseem Soni, director at Cargill Foods India, to drive growth at Modern Foods. Everstone acquired Modern Foods from Hindustan Unilever in April.

“Everstone believes in working closely with its portfolio companies to enhance their performance for the long term. In this context, it looks at bringing in the best talent, including those who have worked at leading multinationals that have excellent business practices and very high standards of corporate governance,” said Dhanpal Jhaveri, managing partner (PE) at Everstone.

Consultancy entity EY say there were 23 PE buyout deals in 2015, the highest ever till now, with total value of $2.9 billion. These are expected to rise as larger business groups want to focus on a few businesses. So, they need to sell what is no longer core focus for them, reflected in HUL selling Modern Foods.  

“PE firms do not have the operating capabilities which these managers bring,” says Mayank Rastogi, partner, transactions and PE at EY India. “These are capable guys with requisite track record and drive to build businesses.

A lot of their remuneration is linked to the success of the investment and are usually rewarded with returns-linked incentives, quite substantial in the context of their opportunity cost.”

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