BBL India – Investment Thesis
Delivering people’s dream is BBL MISSION :DREAMS TO REALITY”. The age old concept of housing as a shelter has transformed with time to mean conversion of their dream.
BBL’s MOTTO is its obsession for quality of materials & construction and In-Time Delivery of products and NOT just about Bricks and Mortar.
Investments in Real Estate:
In Real Estate Projects, BBL believes in buying low and selling high by creating value to the project / assets. BBL invests jointly with investors / partners in projects only if it can acquire an equal or majority / controlling equity position. Minority investments are only made in publicly listed companies either by way of participating in a preferential offering or by purchasing secondary shares on the public markets. The above approach assures the Firm of an effective exit.
Investments in Private Companies:
For private / unlisted investments, BBL thesis is built around realizing superior long term returns by building world class businesses through operating excellence and buying well priced assets. This thesis is executed via “Platform Investing” i.e. the Firm identifies high growth / highly scalable sectors, puts together quality management teams and starts building businesses from scratch.
BBL is Partnered with BHI (Berggruen Holdings India) a part of Berggruen Holdings USA, for developing a Mixed Use Integrated 234 acres Township in Mysore. Where BBL & BHI are 50% partners in the SPV formed for the project in the name of BPPL.
The platform approach result in multiple advantages: In-depth sector knowledge;
- Creation of value in the platform itself;
- Effective and efficient acquisition vehicle in times of a downcycle;
- Enables acquisition of smaller companies, these can be relatively cheaply valued and would normally slip under the radar of potential acquisition / investment targets.
- Controlling equity stake enables better control;
- Best exit options available.
The investment methodology requires extensive research, leveraging of proprietary relationships, a longer term commitment and an ability to be actively involved in the issues that constantly occur whilst developing a business.
Investment Preference
BBL focuses on investing in traditional, basic sectors; typically the investments share the following basic characteristics:
- Asset Backed: be it an asset such as land and building or a depreciating assets like equipment; ownership / control on the assets has inherent advantages:
- Quick momentum for the business – easier to break into clients and better control over the quality of the delivered service / product;
- Assets result in high leverage ratios, thereby resulting in high return on equity.
- Given that these are easily tradable assets, owning them allows for a degree of hedge against the fact that the platform is a start-up company.
Nascent and high growth sectors: These are traditional / basic sectors in nature (such as budget hotels / power) and their development is a necessity for the country. Also, these sectors provide a big enough opportunity hence can accommodate “many winners”.
Scalable, Focus is to invest in businesses which are highly scalable and can absorb significant capital by way of both organic and inorganic growth – thereby utilizing the “Platform” to its optimum. This results in strong returns on large capital outlays.
Potential to drive value through operational excellence, Investments are targeted at sectors where BBL believes its management teams can drive value via operational excellence.
Potential to expand into other developing countries, The businesses being basic in nature can be expanded into other countries as well.
The combination of these five characteristics creates a unique investment opportunity wherein a well-capitalized ‘platform’ company, staffed with a seasoned management with a clear vision can invest significant funds into India and reap rich returns.