Vinod Sethi (Right): Capitalists don't come more aggressive

Mumbai, India, April 23, 2003, 0230 hrs: As the British Airways flight to London takes off, Vinod Sethi settles down to read Yoga Vasistha, a tome dating back to the 7th century B.C. that discusses life, the universe, and grief. It's a nine-hour flight, but he isn't sleepy.

Sethi doesn't venture into London. Heathrow is just a hub and he shuttles to another terminal to hop on to a flight to Zurich where he is meeting with the CEO of a startup in which he is interested.

Zurich looks good in spring, but Sethi hasn't the time to smell the flowers. He is off to Fussach, Austria, a two-hour visit to meet with the CEO of a waste management technology provider.

Then it is time to wing it to Glasgow where he has scheduled a meeting with Pradeep Ramayya, the CEO of AxSys Technology, a company in which he has an investment. Next stop: New York.

New York, USA, April 25, 2003, 1900 hours: Sethi makes his way to his Fifth Avenue apartment. In just around 65 hours, he has clocked 16,080 kilometres and crossed 10 timezones. That's just what one would expect a hot-shot finance pro to do, and everything about Sethi screams finance fast-tracker. Everything, that is, except his interest in grief.

Make no mistake. 41-year-old Sethi is a thoroughbred finance professional. He joined Morgan Stanley Dean Witter in New York, straight out of NYU's Stern School of Business, and when he resigned in February 2001, an act born of the desire to look for the next big thing in his life, he was managing over $2.4 billion (Rs 11,364 crore at today's rates) of the firm's investments in India. And so, he founded Sethi Capital Inc, a New York-based private equity firm with the ambitious target of investing in tomorrow's companies. "In the past 10 years Infosys, Hero Honda, Gujarat Ambuja, and HDFC came and surprised the market," says Sethi. "In the next 10 years, we will see a dozen such superstars emerge; what I am trying to do is catch some of these names-the new Narayana Murthys, Premjis, Munjals, and Sekhsarias-early." The man has identified six of them already (See His Investments), although he is willing to divulge details of only four.

The Starcatcher: Elevating investing to the spiritual plane

The Man

Age: 41

Education: B.Tech, Chemical Engineering, IIT Mumbai; MBA, Finance, Stern School of Business, NY University,

Track Record: Ran a consulting firm, Chemax Consultants, for four years; 12 years with Morgan Stanley; he was the Chief Investment Officer and Portfolio Manager of Morgan Stanley Asset Management managing over $2.4 billion of investments in India when he resigned

Family: Single

Interests: Meditation, yoga, spiritualism, martial arts; currently reading Yoga Vasistha

Objective: To create significant value using limited capital

When he is not playing starcatcher, Sethi, who shares his time between his New York apartment, and Mumbai, where he maintains a suite at the Taj Mahal hotel, reads, meditates, and practices his Kung Fu steps. "It is quasi-spiritual," he offers by way of explanation. "And a nice way to stay fit."

Kung Fu is Sethi's newest passion. Before it came yoga, meditation, and Sri Sri Ravishankar's Art of Living. "I believe it is good to learn something new every five years-it breaks your inertia and opens your mind." And hones its skills in catching the next big thing, if we may add.

If Sethi's timing is any indication, he should pick a clutch of winners. When he quit Morgan Stanley Dean Witter, the Dow was nudging 11000, over 20 per cent above its current level, and MSDW shares were trading at $88 (they now trade at $44).

Nor is this a good time to work for someone, says Sethi. "The markets are going nowhere; so, why work and feel poor?" He is quick to add that this doesn't make him rich and steadfastly refuses to answer any questions on his personal wealth or the investing corpus of Sethi Capital Inc. Capital, he explains, is a commodity-the real fun is to create significant value using limited capital. That, he believes, is precisely what his six winners will do.

Spotting The Winners

For this writer's first meeting with him at the Taj Club at Mumbai's Taj Mahal hotel, Sethi comes dressed casually, in a traditional Indian lounge suit. And he orders masala tea and mineral water-he specifically asks for Himalayan water. That's understandable: Sethi holds the controlling stake in Mount Everest Mineral Water, the company that owns the Himalayan brand.

Natural mineral water, Sethi reckons, will be the next big global trend. If that happens, Mount Everest is sitting pretty on accessible reserves of 20 million litres a day. The Delhi-based Centre for Science and Environment's recent finding that most bottled water sold in India contain traces of pesticide over the permissible limit has proved a boon to Mount Everest.

Salim Govani, Sethi's friend and co-investor, and a director on the board of the company, recalls that he and other executives wanted Himalayan to advertise aggressively to leverage this opportunity. Sethi demurred and advised the team to focus on distribution and institutional sales. Volumes doubled in a month.

Everest was Sethi's first investment. The others happened later, but they had been in the works some time. When P. Subramani, the Managing Director of Chennai-based Enkem Engineers, the company that promoted Asia Bio Energy, first met Sethi six years ago, he was a struggling entrepreneur.

Sethi must have liked what he saw of Subramani. He kept in touch, offered some tips on growth opportunities, and finally invested in Asia Bio Energy in 2001. Soon after, he also invested in Subramani's Green Power Company, which operates in the emerging domain of carbon credits.

The Kyoto accord requires the countries that are its signatories to reduce their co2 emissions. They can do this either by physically reducing emissions, or by buying carbon credits from those who are more successful at doing so. For instance, carbon credits from Asia Bio Energy's waste recycling project for Lucknow are valued at around Rs 20 crore, just about the same as the company's equity. "What Yahoo is to the internet, carbon (credit) is to the next decade," gushes Sethi.

Ramayya of Axys Technology, which operates in the area of healthcare, has a similar story to tell.

He first met Sethi in 1999, when the latter was still with Morgan Stanley. Ramayya was consumed with the passion to create an operating system for healthcare clients. His company, AxSys, eventually came up with a product that could do this, Excelicare. Several hospitals based in United Kindom use Excelicare for everything from home monitoring of chronic diseases to providing customised cancer care.

Today, Sethi has a stake in AxSys and Ramayya claims that his inputs have been invaluable. "For a new technology company, the general trend is to raise money and expand rapidly," he explains. "Vinod advised us to invest in organic growth and grow with (our) cash flow."

It isn't easy spotting the new new thing, but Sethi says it can be done by "reading, meeting a lot of people, and listening to your intuition". Networking, he hastens to add, doesn't mean the cocktail circuit. It means meeting friends, entrepreneurs, global captains of industry, even spiritual thinkers. Sometimes, when he in this mode in Mumbai, Sethi doesn't venture out of the Taj. And these free-wheeling discussions, say people who have participated in them, could range from business related stuff to the meaning of life.

Each of his six investments, Sethi believes, is a self-contained business that "requires my attention one or two days a month".

He is giving each a minimum of six to seven years (what is it about the number six and him?) to grow.

Do his investments keep him busy? Sethi, who has a carefully cultivated image of being as non-busy as anyone could possibly be, answers this in a roundabout way by quoting legendary investor George Soros. "The less I have to do, the better -I am working furiously because I am furious that I have to work."

"Vinod is not one of those investors who are always looking for a quick exit," says Ramayya. And so, Sethi's search for the next big thing continues. He is certain that somewhere out there are 20 companies that have the potential to be $10 billion behemoths someday. As his travel schedule proves, he is willing to go places to find them.