Incredibly delighted to be featured in the Top 10 Chief Research Officers list by CEO Insights!
October 7th, 2022
A Thoughtful Investor With A Penc Hant For Long-Term Compounding & A Firm Belief In India’s Potential
India is increasingly becoming one of the most favoured destinations for investors across the world. Be it foreign investors or domestic ones, everyone believes that India will remain one of the fastest growing economies in the world. However, the enduring investment success in India requires wearing a long term hat and doing deep work on the ground to unearth opportunities. Bay Capital, a boutique investment management firm, through rigorous research and robust investment process, identifies the longterm trends and invests its client’s capital in companies that can sustainably compound their earnings for a long period of time.
The youngest Partner at Bay Capital and the Head of Research, Ravi Srivastava, fervently supports thinking in terms of decades rather than quarters and is a firm believer in the long-term opportunity that India presents. The Bay Capital India Fund, the company’s flagship product, has benefited immensely from his leadership of the whole investment research operation. Ravi has been instrumental in creating a resilient portfolio spanning across the themes of consumption, digitization, financialization, and outsourcing.
Let’s look at some highlights from our interaction with Ravi.
Throw some light on your professional background & experience. What inspired you to start your professional journey in the investment domain? What drives you today?
Now that I come to think of it, my father has been one of the top Scientists in Agricultural Research and my mother has been a Humanities teacher. So, it is not surprising that I will end up enjoying working in a field where the day-to-day focus is on Research and Human Behavior. However, it was never planned to be this way.
Upon completing my Engineering degree, I pursued MBA from IIM-Ahmedabad, after which I worked in an Indian Conglomerate in their M&A division. This experience gave me a firm grounding in financials and evaluating transactions. Moving on to a management consulting firm, I got a bird’s eye view of how capital allocation decisions are taken in the real world. The consulting experience exposed me to the nitty-gritty of running a business. Soon, I discovered public market investing and investment research, which greatly suited my personality traits. Simultaneously, Bay Capital was starting a new public market fund and searching for an analyst that would amalgamate with their culture perfectly, and I fit the bill.
In this rewarding role, I have gotten a chance to see multiple sectors and businesses at work and to interact with the founders, business leaders on a daily basis. The incredible opportunities, our amazing team and the culture keep me motivated. Most importantly, we have been able to achieve an incredible long term investing track record and have generated superior returns for our investors. The drive is to keep getting better as an individual, as a team member, as an investor and keep doing well for our investors!
Talk to us a bit about Bay Capital.
A thought leader in terms of investing in India,Bay Capital is a boutique investment management firm with a marquee track record in public and private markets. Since its founding in August 2014, Bay Capital India Fund has been in the top decile of India- focused fund managers. One of the main reasons for this has been our focus on process and people over results. Our culture of encourages bringing new ideas and people are given a lot of freedom to explore those. Team members are given responsibility early, inspired by Sid Mehta, our Founder & CIO, who deserves the credit for establishing an entrepreneurial culture and thought leadership. We are renowned in the financial industry for our thorough research, meticulous approach, longterm perspective and propensity to take contrarian views.
Reflect on your experience during the challenges that markets throw. What did you learn from them?
One of the most intriguing things about the investment world is that it is touched by every world event. Events like demonetization, GST, the NBFC crisis, Brexit the US-China Trade Wars, pandemics, and the Russia-Ukraine War have had massive impacts. Demonetization posed an epic challenge because it was unique, it occurred at a crucial time for our fund, and the commotion surrounding the event, with forecasts of both good and adverse outcomes, added to the stress.
So, many occurrences led to some crucial realizations. First, while the future cannot be predicted we can control our temperament. Our response in crises defines our character. Second trusting our own process and disregarding the disconcerting noise is key. Third, it further strengthened my belief that long term thinking is crucial in sustaining investment performance. Most importantly, I realized that it is important to communicate our thinking to our investors who had trusted us with their capital. Explaining to them what is happening and how it is likely to impact them was important as that developed trust and strengthened the relationship.
The benefits of these were experienced throughout the most significant market crashes during the pandemic when we didn’t lose a single client; in fact, majority of our investors topped-up their capital with us.
How are you using technology to transform the research function?
Early in 2019, one of our main goals was to institutionalize our research efforts rather than retain data in silos. We made the decision to overhaul the entire research process and added technology as a tool. In order to get all of our research and models in one place, we collaborated with a technology startup to construct a bespoke solution for managing our research reports, financial models, and portfolio view in one place on the cloud. We can examine financial data in-depth, compare businesses, extract notes from management meetings, and alter financial models, all on the go, through Centralis (our research system is named after Area Centralis the part of the eye which has the highest visual acuity), which was crucial in adjusting to the new working style during the pandemic.
Going forward, say five to eight years view, where do you see opportunities emerging from?
As we progress further into the new decade, I am incredibly excited about the opportunities India offers for investors who are willing to take a long term view. While India is likely to see growth in almost every industry, I believe that four major long-term themes are likely to see disproportionate growth and each of these emphasize either the power of India or the change in behaviour. Firstly Consumption, India’s per capita income is rising, and with it, the trend toward higher quality goods and services. This creates opportunities for more established businesses and high end goods. Secondly Digitization, the prevalence of smartphones and inexpensive data has permanently changed how Indians connect with one another and with businesses. Thirdly Financialization, India is going to experience a significant movement away from tangible savings towards financial savings, as more digitally literate young people enter the workforce. Lastly Outsourcing, India’s young population and a knowledge based economy are the building blocks for an economy capable of developing into a hub for global manufacturing and outsourcing. All of our investments in the Bay Capital India Fund are around these four themes.
In the light of your strong industry experience, what advice would you give to the budding professional in this domain?
It can be pretty tempting to become sidetracked by compensation or monetary rewards when working in the highly gratifying sector of investment. To succeed in this sector one must have a strong desire to grow personally and intellectually. Daily improvement of oneself should be the goals, in the achievement of which, enjoying the journey is essential. The rest will fall into place automatically.
Ravi Srivastava, Partner & Head of Research, Bay Capital
Ravi has a PGDM from IIM-Ahmedabad and a degree in electronics and communication engineering from VNIT, Nagpur. He also holds a CFA charter, bringing a decade of expertise in the fields of M&A, strategy & decision consulting, and investment management. Ravi oversaw multiple engagements with customers from India, the Asia-Pacific, and the US while working for Singapore-based strategy consulting firm SLC before joining Bay Capital before which he worked at Siva Group’s M&A unit in India.
Excerpts from the interview have been covered here on the CEO Insights India website :-https://www.ceoinsightsindia.com/leader/ravi-srivastava-a-thoughtful-investor-with-a-penc-hant-for-longterm-compounding-a-firm-belief-in-india-s-potential-cid-5230.html
Posted by Ravi Srivastava, Partner & Head of Research