Key Takeaways
- • Fund managers Renuka Ramnath (Founder, MD and CEO of Multiples Alternate Asset Management) and Nilesh Shah (MD of Kotak Mahindra Asset Management Company) offered divergent views on market downturns at Kotak Private's third 'Take and Counter Take' event, per Livemint.
- • Ramnath argued private markets offer a safe haven during a crash because investors hold board seats, affirmative clauses and control over cash deployment and strategy.
- • Shah argued the post-bubble period is when public markets offer the greatest wealth creation, as public investors sell assets below fair value while private company promoters rarely sell cheaply.
- • Both managers agreed investors should diversify across public and private markets rather than treat them as an either-or choice.
- • Ramnath suggested an investor moving from 100% public equity could gradually allocate up to 30% of the equity portfolio to private markets over a five-to-seven-year horizon.
Summary
Fund managers Renuka Ramnath and Nilesh Shah offered contrasting prescriptions for investors during a market downturn, with Ramnath favouring private markets and Shah favouring distressed public equities, according to Livemint's coverage of Kotak Private's third edition of 'Take and Counter Take'. Ramnath is Founder, MD and CEO of Multiples Alternate Asset Management, and Shah is MD of Kotak Mahindra Asset Management Company.
Ramnath argued that private markets provide a safer position in a crash because investors retain operational control. As a board member, she said, private equity investors can use affirmative clauses to decide how cash is used, what to accelerate, postpone or drop, and how to steer companies through macroeconomic or company-specific shocks. She added that outsized private equity returns typically require active crisis management. Shah countered that the period immediately after an asset bubble is when public markets offer unusual wealth creation opportunities. He noted that private company promoters are unlikely to sell their businesses at a discount during a crisis, whereas public market investors often liquidate portfolios at lower prices.
Despite these divergent views, both managers agreed that investors should diversify across asset classes rather than choose between public and private markets. For investors moving from a purely public equity portfolio, Ramnath recommended a gradual increase in alternative exposure, suggesting that over five to seven years an investor previously fully invested in public equity could comfortably allocate up to 30% of the equity portfolio to private markets.
The discussion was framed by Oisharya Das, CEO of Kotak Private Banking, who said the growth of private markets gives India's wealth creators a broader opportunity set while making allocation decisions more nuanced. The article cites a Linqto report defining private markets as assets not traded on public exchanges, including private equity, venture capital, private debt and hedge funds. The article is an educational piece and not investment advice.
Ramnath argued that private markets provide a safer position in a crash because investors retain operational control. As a board member, she said, private equity investors can use affirmative clauses to decide how cash is used, what to accelerate, postpone or drop, and how to steer companies through macroeconomic or company-specific shocks. She added that outsized private equity returns typically require active crisis management. Shah countered that the period immediately after an asset bubble is when public markets offer unusual wealth creation opportunities. He noted that private company promoters are unlikely to sell their businesses at a discount during a crisis, whereas public market investors often liquidate portfolios at lower prices.
Despite these divergent views, both managers agreed that investors should diversify across asset classes rather than choose between public and private markets. For investors moving from a purely public equity portfolio, Ramnath recommended a gradual increase in alternative exposure, suggesting that over five to seven years an investor previously fully invested in public equity could comfortably allocate up to 30% of the equity portfolio to private markets.
The discussion was framed by Oisharya Das, CEO of Kotak Private Banking, who said the growth of private markets gives India's wealth creators a broader opportunity set while making allocation decisions more nuanced. The article cites a Linqto report defining private markets as assets not traded on public exchanges, including private equity, venture capital, private debt and hedge funds. The article is an educational piece and not investment advice.
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