Billionaires: Anil Agarwal ready to invest $10bn in India's privatisation push

In our fortnightly roundup, the metals tycoon teams up with UK investment company to turn around state companies while the Reuben brothers hunt for property bargains in Manhattan

Anil Agarwal, billionaire and owner of Vedanta Resources, is teaming up with London-based Centricus Asset Management to seek investments in Indian companies offering substantial growth opportunities. Photo: BloombergShow less

Anil Agarwal

Commodities tycoon Anil Agarwal plans to invest $10 billion through a new partnership focused on companies being sold by the Indian government under its Rs2.1 trillion ($29bn) privatisation programme.

Mr Agarwal is teaming up with London-based Centricus Asset Management to invest in state entities that offer substantial growth opportunities and turn them around.

A former metals trader, he made a fortune buying state companies and fixing them up, and built a metals and mining powerhouse under the umbrella of Vedanta Resources. He is now seeking to repeat that success and believes that he can spot gems among the dozens of companies being put on the block by the Modi administration.

The entrepreneurial dynamism in India can be harnessed to unlock incredible transformation in the public sector

Mr Agarwal said the entrepreneurial dynamism in India “can be harnessed to unlock [an] incredible transformation in the public sector”.

“We believe that this strategy can, and will, play a crucial role in the country’s ongoing industrialisation,” he said.

He plans to help former government companies hasten their transformation into private sector companies that are managed professionally.

Vedanta is among the parties that have expressed interest in acquiring India’s stake in $12bn refiner Bharat Petroleum.

Mr Agarwal and Centricus have sought to raise capital from international investors to use in such turnaround opportunities, Bloomberg News first reported in September. They have been planning a fund with a 10-year lifespan that will use a private equity type of strategy, buying into companies and boosting their profitability before seeking an exit.

Centricus oversees $28bn in assets, according to its website. The company was started in 2016 and advised SoftBank Group on the creation of its $100bn Vision Fund and also worked on its $3.3bn takeover of the Fortress Investment Group.

Mr Agarwal has made a series of ambitious acquisitions over the past few decades, including a 2001 deal to take control of government-owned Bharat Aluminium. He has a net worth of $2.5bn, according to the Bloomberg Billionaires Index.

Simon Reuben and David Reuben have spent nearly $2.5 billion on US acquisitions and financing deals this year. Photo: Getty Images

Simon and David Reuben

Billionaire brothers Simon and David Reuben have been buying Manhattan property as they increasingly bet on a property market that has taken a hit during the pandemic.

The Reubens, well-known property investors based in the UK, have spent about $2.5bn on US acquisitions and financing deals this year.

That includes office, retail and hotel properties in Manhattan, where investment has declined as social distancing keeps office workers and tourists at home. The brothers, who are worth more than $12bn combined, bought a Fifth Avenue retail condo and the five-star Surrey Hotel on the Upper East Side.

They also provided financing for HSBC Holdings’ US headquarters on Fifth Avenue and the Park Lane Hotel, which borders Central Park.

“For somebody to put capital into Manhattan right now – they are making a call on the future of the city,” said Jim Costello, senior vice president at Real Capital Analytics. “It can be helpful for an investor to run into the fire when nobody else is going there.”

US commercial property deals fell 40 per cent to $313bn this year through to November, according to Real Capital. It is worse in Manhattan, where the decline was 57 per cent.

That is largely because buyers and sellers cannot agree on what buildings are worth. Sellers would have to cut prices by at least 15 per cent in New York to ensure deals are flowing again, Mr Costello said.

Elsewhere in the US, the Reubens have also bought or financed hotels in Miami, Chicago and Los Angeles this year, according to their website.

Sergey Dmitriev and Valentin Kipiatkov

Sergey Dmitriev and Valentin Kipiatkov

While investment funds in Silicon Valley have turned the owners of many unprofitable start-ups into billionaires overnight, the founders of JetBrains have achieved that without the help of venture capital.

The Prague-based start-up, whose programming language last year became Google’s preferred development tool for Android, is worth about $7bn, according to the Bloomberg Billionaires Index.

That makes Sergey Dmitriev and Valentin Kipiatkov, two of the three Russian founders who incorporated JetBrains in 2000, billionaires. The valuation is based on JetBrains’ 2019 results and the value of publicly traded peers.

The company, which claims that it is one of the biggest employers of programmers in St Petersburg, is not interested in raising capital amid high demand for technology companies, according to chief executive Maxim Shafirov.

Venture capitalists write every other day, and I feel like a very impolite, unkind person, because I've stopped answering

“Venture capitalists write every other day, and I feel like a very impolite, unkind person, because I have stopped answering,” Mr Shafirov said. “We have got enough resources to realise our ambitions.”

The lack of investors means JetBrains is under no pressure to sell shares amid the current listing boom, with December set to be the busiest year end on record for initial public offerings in the US.

Unlike many companies selling stakes this year, JetBrains already turns a profit. It is on track this year to boost earnings before interest, tax, depreciation and amortisation by more than 10 per cent to more than $200 million, according to Mr Shafirov.

Its recent success stems from its open-source Kotlin programming language for Alphabet’s Android. In 2019, Google announced Android development was “Kotlin-first”, making it the preferred language for the world’s most popular mobile operating system.

According to Google, more than six in 10 professional Android developers use Kotlin, including Google itself, which tapped it to design its Maps, Home and Play apps.

Mr Dmitriev and Mr Kipiatkov maintain control over the company, according to Mr Shafirov.

The company's target audience is the information technology sector, where its developer tools command a loyal following. About 9.5 million programmers use its software and 20 per cent of them are paying customers, said Mr Shafirov.

Additionally, 430 Fortune 500 companies are clients, including Citigroup, Google and Volkswagen, according to JetBrains.

Mike Novogratz, founder and chief executive of Galaxy Investment Partners and a billionaire Bitcoin investor, is wagering on volatility by backing Millbank Dartmoor Portsmouth, an investment fund founded by Wall Street veteran Dennis Davitt. Photo: Bloomberg

Mike Novogratz

Billionaire Bitcoin investor Mike Novogratz, 56, is wagering on volatility, a market that is still scarred by the coronavirus-induced slowdown earlier this year.

Mr Novogratz is among the backers of Millbank Dartmoor Portsmouth, an investment fund founded by Wall Street veteran Dennis Davitt that seeks to have more than $1bn under management within the next 12 months.

Mr Davitt said the company will offer volatility-based strategies to investors such as pension funds and family offices, including versions of the so-called short-volatility bets that imploded in March.

As ultra-low interest rates persist, Mr Davitt and his backers are hoping investors will ease back into these strategies, which he aims to deliver using more transparency and less leverage than the funds that found themselves in trouble.

“The most successful funds that are out there are the simplest funds in the volatility space,” Mr Davitt said.

He said the company intends to provide chief investment officers with volatility solutions they could understand and, in turn, explain to their boards.

Millbank Dartmoor Portsmouth, which is based in North Carolina, has lined up Mr Novogratz, who heads cryptocurrency firm Galaxy Investment Partners, and Richard Tavoso, a Galaxy director and former head of global arbitrage and trading at Royal Bank of Canada, as advisers.

“Institutions like farming out volatility strategies to specialists,” said Mr Novogratz.

Millbank Dartmoor Portsmouth plans to offer short-volatility strategies, which profit as long as markets stay calm, and several others. Mr Davitt said the fund intends to start with an “iron-condor” fund that uses complex options trades and is also a targeted-volatility strategy.