Suman Joshi: Building the Private Equity industry in Nepal

Suman Joshi: Building the Private Equity industry in Nepal

Suman Joshi is undoubtedly one of Nepal’s leading bankers, having spent 24 years in this sector. With his experience and acumen for good deals, he is now leading the way in Nepal’s burgeoning Private Equity sector as well.

 

A career banker, Suman, spent his formative years at Standard Chartered Bank. It was there, he shares, he “gained the knowledge and culture of an international bank”, and went on to set up a national bank – Laxmi Bank, where he served as CEO for three terms. His ‘unconventional’ deals, like the leveraged buy-out of the Gokarna Golf club, highlights his firm grasp of what is necessary for Nepal’s economic growth, and, that, he is not scared of taking risks.

“Nepal’s financial sector is heavily skewed towards banking; therefore, more non-banking financial activities are necessary” he revealed speaking about his career shift.  The current emphasis on accessing money through bank debt “limits small businesses that do not have assets for collateral. Also, given their fiduciary responsibility, banks’ risk appetite is limited. However, with Private Equity, investors share the business risks and entrepreneurs are able to access money for a longer term and more accommodative to the company’s growth needs .” This consciousness led him to open TNA in 2014.

Recently, TNA formed a partnership with One to Watch. “It is early days for Private Equity in Nepal, so it is better to collaborate than compete. Furthermore, One to Watch, which is a pioneer in this industry, has a longer history and wider market presence and works exclusively in the SME space. This partnership is beneficial for both since SMEs in Nepal typically tend to be less organized and are in need of a lot of hand-holding, making it costlier to manage SME portfolios separately.”

This partnership, Suman further explains, will help Nepal’s Private Equity (PE) sector grow, “we have launched a much bigger PE fund, than what our individual entities had in the past. Plus, with the combination of a local experience and international access, we can produce much better results.” Suman also noted that “the local connection will help the international community better understand the context, while international links will help improve local skill sets at a faster rate. We also have this unique opportunity where we can tap into both local and international funds to co-invest, something that has not been done before, and therefore our investment ability will be more than our new 20 million euro fund.’

Suman foresees Nepal’s PE sector becoming bigger in the coming years. A couple of years ago very few people knew about PE, but now “many in the business community understand it, especially the younger generation. They are taking charge, and are more open about PE investments.” Additionally, SEBON (Securities Board of Nepal) is drafting a regulation that will create frameworks to make a more favourable PE environment. “There is a lot of interest from international PE players to enter the market. In the next five years, I expect the industry to be two or even three times bigger, building possibilities for all kinds of companies. So, right now is the time for us to build success stories.”

In these early days for PE in Nepal, where there is much room for companies to grow, Suman Joshi sees his role, and that of One to Watch, as a “catalyst supporting entrepreneurs reach their full potential and therefore helping Nepal’s economy grow.”