Berggruen Holdings, a private investment company founded by Mr Nicolas Berggruen, manages over a $1 billion in assets. It invests its own proprietary capital in a range of asset classes, including private equity, real-estate and industrial projects. It has presence in the US, Europe and Asia.

In the real-estate space, Berggruen Holdings buys properties, develops real-estate and has direct real-estate operations in the US, Germany, Turkey and Israel. It set up operations in India two years ago and started work on a hotel chain and real-estate projects in Mysore, Visakhapatnam, Hyderabad, Coimbatore and Raipur. Berggruen Holdings is also keen on SEZ space where it sees significant potential. Over the next one year it is committed to investing about $300 million in India.

Mr Nicolas Berggruen shares some of his business plans in this interaction.

Excerpts from the interview:

What went into your decision to enter India and what are your plans here?

Personally, I like India and have affection for it. India also has the advantage of being a dynamic and growing economy — these are generalities but relevant.

Berggruen Holdings plans to invest in basic businesses that we think make sense here. We are investing in basic infrastructure services that will, hopefully, be scalable and contribute to the economy.

As opposed to others who buy or grow on existing developments, Berggruen Holdings has decided to start from zero. This is harder but at the same time we control our destiny better and establish our own image and brand.

What are your areas of operations and investment?

We have invested in six different areas — hotels, where we are planning hotel chain in 40 locations by 2012; construction equipment rental — construction industry and infrastructure development are happening areas; car rental business which is growing fast; vocational education institutes — again a part of the basic need catering to airline and retail staff training; warehousing and logistics which is not very developed in India; and real-estate, where we have the entire range of capability from acquiring land and following through to completion.

Can you elaborate on the size of investments that you are planning and the returns that you expect, private equity funds seem to target over 25 per cent?

We have invested over $100 million so far and that will grow. Some businesses are more capital-intensive than others. The investment target depends on development and market growth. When we came in last year we had no idea which sector to enter and how much money to invest. But we are very entrepreneurial.

It would be very hard to put a number on the targeted returns. But let us say the number you mentioned would be the minimum we expect. Real-estate will be a difficult market in the next two years but that is good and bad. Hard times mean projects would be slower but funding opportunities would be better. We have made a few investments but not too many and been conservative.

You seem to be concentrating on smaller towns and cities for your real-estate projects?

We have focussed on the Tier II towns not for any strategic reasons but for practical reasons. In the last few years, Tier I cities have been expensive. But with prices coming down we are open to the idea of entering larger cities.

In real-estate development — we will be all around India. The South, where we have started, is a relatively stable market and there is not much turbulence. There are projects planned in central India.

In the hospitality sector, what segment of the market are you targeting?

Berggruen has it own brand in hotels, Keys, which targets the budget segment. It will be a full-service facility with focus on technology to keep costs down. The first is likely to start operating early next year at Thiruvananthapuram at a cost of Rs 22 crore. We have 15 sites on hand — 13 of them are our own and two are under management contract where the hotels will be coming up. By 2012, we plan to have over 40 hotels across the country. We have deployed over $30 million and have a healthy debt finance from IDFC.

Could you share your plans in warehousing and logistics and equipment rental, which are both at a nascent stage in India?

In warehousing and logistics, the sector is new. That is exactly why we are in it, and it is very needed. We will focus on a network of storage and last mile transportation.

In the equipment rental business we are the fourth largest in India. With more than 250 machines, we cater to large construction companies and infrastructure developers. The business is, for now, in Andhra Pradesh, Delhi and Ahmedabad.

Responses to blproperty@thehindu.co.in

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