Often referred to as India’s Warren Buffet, the ace investor initially invested in Concord in 2004 and later assisted the company’s founder in repurchasing it from pharma major Mylan in 2009.
Despite his close to two-decade-long investment in the company, Jhunjunwala’s investment firm RARE Enterprises does not plan to sell any shares in the Concord IPO. In fact, RARE intends to hold onto the shares for a long time, as it believes that its investment can further compound. Rajiv Agarwal, who oversees listed and private strategic investments of the firm, stated this.
The IPO, valued at ₹1,551 crore and oversubscribed two times, values Jhunjunwala family trusts’ 24% shareholding at ₹1,867 crore. RARE had initially invested approximately ₹49 crore in the company in 2009.
“I see this business growing strongly and consistently for the next few years, and it makes sense for us to stay invested in a growth company that can compound for a long time,” said Agarwal.
“Investors are always seeking businesses that can scale up profitably and, after an inflection point, do not require significant external capital to fund growth as they can do it internally. Through our investing experience, we have realized that backing the right business model with a passionate and execution-focused management team is key to reaching that scale and inflection point, which is easier said than done,” he said. “I can confidently say that Concord is one such business. We believe that Concord has achieved a decent scale, and due to the long runway for growth, it can continue to grow in a capital-efficient manner.”
Despite being a growth company, Concord generates healthy cash flows to fund capex and reward investors with regular dividends, Agarwal added.Two Decades
Jhunjhunwala first invested in Concord in 2004. In 2006, he sold most of his stake to Matrix Laboratories, which was later acquired by Mylan, retaining around 7% stake. However, Mylan and Concord disagreed on their product pipeline, and in 2009, Jhunjunwala helped Concord founder Sudhir Vaid in purchasing Mylan’s stake.
“We believed that Sudhir Vaid’s expertise in fermentation technology and his ability to set up fermentation plants cost-effectively gave us a significant advantage and confidence. This is a specialized business, and such skills are hard to come by,” said Agarwal.
Agarwal, a graduate in chemical engineering from the Institute of Technology, Banaras Hindu University, joined RARE Enterprises in 2006 after working at consulting firm Accenture. At RARE, he has invested in various B2B and B2C businesses in the consumer, education, mobile entertainment, media, and financial services sectors.
RARE, with investments in several private companies, is currently focused on taking these companies public as they mature. The firm manages a portfolio of around $6 billion in both public markets and private investments.
“For our private companies, we are following the strategic plan we decided upon with Rakeshji when he was here. At this point, our focus is on figuring out a way to list these companies as they mature. Some companies will take time to scale up their revenues and profits,” said Agarwal.
“We believe companies should go public when they have a profit visibility of at least ₹100 crore so that they can attract good institutional investors,” he added.
RARE Enterprises’ private investment philosophy has evolved over the years from backing small promoter-run companies to investing in scaled-up companies with strong management teams.
In 2021, RARE, along with Multiples and CPPIB, acquired Zydus Cadila’s animal health business for ₹2,921 crore. Previously, in 2018, Jhunjunwala had acquired Star Health for around ₹6,500 crore in a consortium with Westbridge Capital and others.