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Investing in the businesses of tomorrow – Mahindra Partners

Mahindra Partners’ genesis is rather interesting, beginning with Group Chairman Anand Mahindra’s return from a top global conference where he interacted with some leading investment analysts. Their feedback led to the insight that while everyone appreciated Mahindra’s diversity, rapid expansion within the Group meant that the time had come for a new Governance Model to drive and manage future diversification.

Senior Mahindra executives Zhooben Bhiwandiwala and Parag Shah, who jointly manage Mahindra Partners today, were tasked along with key members of the Group Strategy Office to develop a solution. The ask was clear – design a governance framework that would allow the Group to continually incubate and grow the businesses of tomorrow.

Over the next 12 months, the team interacted with experts, academia and other large corporate houses in India and globally. The insights, combined with their own business experience helped the team to develop a rather unique quasi-private equity governance model that would manage a portfolio of future-oriented businesses. This approach combined a traditional corporate structure with a private equity business model to create a hybrid model that was the best of both worlds.

Mahindra Partners has always been more than just financial investors; they have been business builders in keeping with the nation-building spirit of the Mahindra Group

On the corporate side, they would offer the Mahindra brand, along with long-term patient capital. They would also provide the Group’s entire muscle power – its network, vendors, customers, best practices and knowledge. On the private equity front, they sought to bring in rigour, focus and agility. In addition, they wanted board members and investor partners who would help them build and grow businesses.

And so, Mahindra Partners was born in 2009, embracing a gamut of opportunities by combining the old with the new, the internal and external, to become an active overseer, a nurturing incubator, and a far-sighted investor with the mandate to build a portfolio of future-oriented businesses for the Mahindra Group. Mahindra Partners has since then completed more than a decade of successful operations.

The three pillars

The unique structure of Mahindra Partners within the Mahindra Group has been supported by three key pillars. The incumbent portfolio was the first, with a task to turnaround, revive or transform companies including Accelo, Logistics, Retail, Tsubaki, Water Utilities, Waste to Energy Solutions and MACE to achieve accelerated performance. The second pillar was to incubate future-oriented businesses like Susten, Namaste and Marine. The third was to develop future optionality through external investments in identified areas of potential growth such as the East India Company, Medwell, Centre For Sight, Avaamo, Cloudleaf, Inc, and Aquasail.

Right people in the right business

The business of investing is equally about the people who drive it, as much as it is about numbers. While evaluating potential investments, Mahindra Partners focuses on the depth and calibre of management teams. They look for people with the ‘right stuff’ namely that entrepreneurial spirit, which is then given free rein through true empowerment. The other part is the opportunity itself: the changing sector, the disrupting industry and the business model.

Mahindra Partners has always been more than just financial investors; they have been business builders in keeping with the nation-building spirit of the Mahindra Group, ever since it was established back in 1945. Mahindra Partners also reflects the Group’s forward-thinking and progressive approach to managing businesses while also embodying the spirit of ‘Rise’ and its three pillars – Accepting No Limits, Alternative Thinking and Driving Positive Change.

Through thick and thin

The success stories of the companies within the Partners portfolio stand testament to their unrelenting drive through the years. The transition of Mahindra Intertrade to Mahindra Accelo brought in a renewed vigour in the business. With agility at its core, it launched the first organised automotive recycler in India, called Cero. This exemplifies Mahindra’s ‘Good Business’ theme for its 75th anniversary that seeks to develop sustainable new businesses that are good for society over the long term.

Mahindra Logistics, just like many other entities, evolved to a significant profit making company, garnering external capital

Mahindra Logistics evolved from a loss-making entity to delivering significant profits and even garnering external capital. In a milestone event, it became the first company from the Partners division to successfully launch an IPO. It has spread its wings further into a new phase of growth by joining the recently formed Mobility Services Sector of the Mahindra Group.

From the seed of an idea to a world-renowned solar company, Mahindra Susten has grown from an EPC business into a globally recognised full-service solar company. It has further incubated new businesses in the renewables space, such as Solarise and Teqo.

Heading in a new direction with healthcare Mahindra Partners made its first investment in the healthcare sector in early 2014 with Medwell, a home healthcare services company in India. The most recent investment has been in Centre For Sight, India’s second-largest ophthalmology specialised hospital chain. Looking ahead, Partners aims to further consolidate its presence in the healthcare sector through future incubations/investments. Partners foray in the healthcare sector also reflects Mahindra’s core values of doing well while doing good for the communities and societies we operate.

Gateway to the future

Experimentation is deeply embedded into the DNA of Mahindra Partners, with the team constantly searching for new ideas that could develop into the businesses of the future while also helping India grow and prosper.

Many companies are shaping and changing how business is done altogether, be it how people consume or address everyday needs and challenges. These are the kinds of companies that Mahindra Partners wants to support, as it works to build a culture that adds value over time without losing sight of Mahindra’s core values and principles.

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