Julien Kinic (IDI EMERGING MARKETS): A stable base for investing in a frantic world
Julien Kinic, managing director of IDI Emerging Markets, says Luxembourg’s appeal to private equity firms includes its quality of life, but also the authorities’ ability to keep one step ahead of the competition.
How and where does IDI Emerging Markets invest?
We are an investment firm that focuses on private equity in emerging countries, with 49 investments so far in China, India, Latin America, South-East Asia, Africa and the Middle-East through three different approaches. Our historical model – still accounting for 50% of our business – involves investing through local PE firms. We also acquire portfolios of emerging market investments through secondary transactions, and make direct investments in companies.
You sold Ducati to Audi in 2012 for €860m.
What kind of investments do you make?
In all our investments, we target equity investments in fast-growing SMEs. An example of a primary fund investment is Peepul Capital in India. The firm is run by two charismatic partners from Chennai who are very passionate about the companies they invest in, and with whom we have been working since 2006. Through Peepul we invested for example in MedPlus, a Hyderabad-based pharmacy and pathology lab chain providing India’s middle-class professional medical advice in-store. We managed a return of close to four times the investment in this chain, which is growing at a rapid pace.
As another illustration, we conducted a secondary transaction involving China Renaissance, a Chinese investment fund with which we have been in contact regularly since 2008. When one existing limited partner needed liquidity for its share in the fund, we were able to move quickly and optimize the pricing as we already knew the portfolio and trusted each other. An example of direct investment comes from Sub-Saharan Africa and the trend for telecom operators to sell their mobile phone masts to specialist firms. We invested in IHS Telecom, a fast-growing portfolio company managing over 8,250 towers in Nigeria, Cameroon and Côte d’Ivoire.
Why did you set up your GP entity in Luxembourg?
The business was launched in 2004 by IDI Group, a French private equity house, and has been moved to Luxembourg in June 2008 as an independent entity, to benefit from a transparent and efficient structure for investing in emerging countries.
Our key people live in the grand duchy – with all their families –, providing an assurance of stability for our investors. Since we are traveling all the time, Luxembourg provides a welcome respite from the frantic world. I personally live close enough to cycle to the office, with the airport only 15 minutes away. Our offices in the heart of the city are relaxed and quiet, letting us focus completely on our work. Recently, we decided to launch our third investment vehicle as a Luxembourg SIF. We are here for the long-run, and always value the ability of officials to run the country as a well-managed company and stay one step ahead of the competition in the fund industry.