Sameer GehlautIndiabulls – A success story of an unsung hero Published On: Tuesday, December 01, 2015 Views 16103
Evidently, a lot has been spoken about the technology world and start-ups across India and the world in general. But there still remain a few unsung heroes, who have managed to achieve huge success in a short span of time, yet people don’t know much about them.
There are some who dream about starting a company that grows into a large and diversified corporation, but only a few manage to reach to that stage.
Sameer Gehlaut is one such man!
Born on the 3rd of March 1974; Sameer Gehlaut, with a net worth of US$ 1.2 billion is the Founder of Indiabulls Group.
Described as “India’s youngest self-made billionaire” by Forbes, Sameer serves as the Chairman of the group, which holds its presence in sectors ranging from Real Estate, Infrastructure, Housing Finance, and Securities.
As of 2015; with a staffing of 7000 employees, the group holds a market valuation of more than ₹34,000 crores!
Indiabulls is also said to be one of the highest dividend paying groups amongst the Indian listed promoter owned group/companies.
Born in Rohtak, Haryana; Sameer is a Bachelor in Mechanical Engineering from IIT (Delhi), and now lives with wife Divya Gehlaut and two children in Mumbai. His father Balwan Singh Gehlaut was once known to be a powerful mining businessman of his times.
How Did Sameer Started Indiabulls?
After completing his degree from IIT Delhi in 1995, Sameer wanted to take a worldly experience, and decided to work an American oil services company called ‘Halliburton’. And after working with them for almost two years, he came back to India to join the family business.
But fate had something else in store for him!
In complete happenstance, around the middle of 1999, a good opportunity came knocking at his doors. ‘Orbitech Pvt. Ltd.’ – a non-operational Delhi-based securities company with a membership in the National Stock Exchange, was out on sale for a fraction of crore rupees.
Without wasting much time, Sameer along with his close buddy from IIT – Rajiv Rattan, decided to buy the company and thought of starting brokerage services.
They began their operations from a small office which had a tin roof and just two computers, near Hauz Khas bus terminal in Delhi.
A few months passed by and work began to progress. They also got in another friend of theirs – ‘Saurabh Mittal’ as a partner.
By the end of the year, the company setup an online trading platform and started India’s first Internet brokerage services. The service in the initial days was only limited for institutional investors.
A portal like such leveraged them to target all the investors across the country, that too, without having to create a vast branch network.
Having that ready, finally in January 2000, Indiabulls Financial Services was officially incorporated.
How Did They Proceed After Receiving Investment From The Lakshmi Mittal?
Now soon, after the company was incorporated, the founders aggressively began looking for investments. They even hired a Mumbai-based investment bank, Avendus Advisors, to scout around for an investor.
While they were at it, Gaurav Deepak the cofounder of Avendus, happened to bump into Rishi Khosla, Lakshmi Mittal’s fund manager. As the two began talking, Gaurav figured that, Mittal’s were also looking for a prospective company to invest in.
Subsequently, negotiations began between Aditya Mittal (Son of Lakshmi Mittal and Vice Chairman on the board of directors of LNM Holdings) and Sameer began on the phone.
After deep discussions and meetings between the two parties, the deal was finally cracked. Mittal’s obviously liked what he heard and gave Indiabulls its first Angel Investment of $1 million at ₹5 per share. The deal was signed in London.
According to the Mittal’s – they agreed to fund the start-up because they liked their business plans (e-trade broking) and execution capabilities, and were confident of their potential to take it ahead in the right direction.
This investment was also said to the Mittal’s first investment in India, and which the first one to go on to give him 100 times the returns. This was the highest return of all their global investments comparatively.
Nearing the end of the year 2000, Indiabulls Securities (a subsidiary of Indiabulls Financial Services) started opening physical offices across India.
Although, the founders or the company in general, didn’t have much clarity of their position or the broking business itself, but as they moved ahead penetrating the retail market, they noticed that there lied a huge untapped consumer finance and real estate businesses which held immense potential.
Keeping that in mind, Indiabulls securities aggressively began establishing a strong presence and client base across India through its offices and on the internet. In a matter of a year, the company had setup nearly 75 branches.
And after the base-building was done, the company then went on to do what they were waiting for eagerly. Indiabulls Financial Services started offering consumer loans, and around the same time, also went public with an IPO in 2004.
How Was Their Growth In The Next Few Years Like?
After the IPO, the company still went on to continue to raise more funds regularly, in order to maintain and sustain the speedy growth and diversification that was about to come.
Along with that, Indiabulls opted for a strategy which confused almost everyone.
They massively started expanding the number of branches in all the major cities and towns. This increase was expansion was so unsystematic that some of the branches were so close that they were targeting the same customers.
Obviously, it looked stupid and wild to many, but what they didn’t see was that the company was planning a grand strategy which was in process to unveil itself.
Now everybody saw that the company was entering into the Loan market, but what nobody guessed was, the size of Indiabulls intentions.
Around the end of 2004, Indiabulls announced that they were full fledgedly entering into the financing business with various schemes for Home Loans, Loans Against Securities, Business Loans, Commercial Vehicle Loans, Mortgage loans, etc., and the branches that they were setting up all over India, were instantly converted into exclusive branches of Indiabulls Loans.
This shook the market to the core! At one end, the investors couldn’t control their happiness and excitement, whereas on the other end, the competitors were all furious and sulking.
In March 2005, Indiabulls Group also marked their entry into the Real Estate Business, by winning a government auction of Jupiter Mills in Lowe Parel (a defunct 11 acre textile mill) and Elphinstone mill in Lower Parel, which were owned by NTC.
Looking at the humongous size of their real estate business, Sameer also demerged Indiabulls Real Estate from Indiabulls Financial Services. This separation was followed by the demerger of Indiabulls Securities as well.
Moving ahead, two years later in year 2007, a 100% subsidiary called – Indiabulls Power was also formed to build power plants. They began work by building Nashik & Amrawati thermal power plants, and consequently went public in 2009.
In a matter of just two years, the group’s market cap had grown from ₹3,000 crores to a whooping ₹29,000 crores in 2007, lifting them up amongst the top 20 business conglomerates in India, by market value.
In 2010, the group also formed a CSR Arm called – ‘Indiabulls Foundation’ and since then has taken a number of social initiatives in the areas of Health, Education, Sanitation, Nutrition, Disaster Relief and Sustainable Livelihoods, which could boost the growth in India as well.
Anyway, their real estate end of the group saw that India was ready for the concept of hypermarkets and multiplex-cum-malls, basically, organised retailing. Hence, the promoters also began acquiring properties via auctions in cities like Madurai, Jodhpur, Hyderabad, Agra and Kanpur, and set aside ₹1,500 crores for this project.
This was followed by a joint venture with ‘Sogecap’ (subsidiary of the French company Societe Generale) to enter into the Life insurance business as well.
TRIVIA: – Not many are aware that, Indiabulls had also unsuccessfully bid for ‘United Western Bank’.
Why Did The Co-founders Separate?
Last year, in 2014, what came as a shock to many was that, the promoters of the Indiabulls Group would be parting ways harmoniously. Going by the words of the management – they are doing so, to maintain their focus on the companies they have been handling of Indiabulls Group.
This news was followed by an elaborate restructuring of the shareholding and management control of its various businesses. Adding on – Sameer would be acquiring back maximum shareholding from Rajiv and Saurabh in the housing finance and real estate businesses, and would also be selling his ownership in the power business.
The management and control of housing finance, real estate, securities, and wholesale trading businesses would remain under Sameer, while, Rattan and Saurabh have already resigned as directors of Indiabulls Housing Finance and Indiabulls Real Estate.
On the other hand, Sameer has also resigned as the Chairman and Director for Indiabulls Power and Indiabulls Infrastructure and Power.
And lastly, Rattan and Saurabh would also giving up all their rights or interests in the ‘Indiabulls’ brand name, and the names of the companies under them would also be changed before December 31, the filing states.
Since then the group under Sameer has seen a massive jump in its fortune which have more than doubled in the past year. Today the company holds a Market Valuation of more than ₹34,000 crores, which is a huge number for a 15-year-old company.
The property arm of the group is also in process to build a $500 million luxury development called ‘Blu‘ in Mumbai, which will have 300 apartments priced from $2 million to $15 million each.
More recently, Indiabulls Housing Finance has invested $100 million (Rs 660 crore) and acquired 40% stake in a UK-based ‘OakNorth Bank’.
The bank was setup by Rishi Khosla in 2013. Rishi is the same person who was the fund manager of the Mittal’s during Indiabulls first Angel Investment deal.
This is the first time an Indian housing Finance company is buying a stake in a UK-based bank, but at the same time, this investment would also give Indiabulls a global platform for learning of doing business in a highly regulated market.
Additionally, Sameer would also be investing ₹538 crores in Indiabulls Real Estate Ltd, raising his stake from 27% to 37%.
What Were The Challenges Faced By The Company?
Evidently, this kind of risk-taking way of doing business has not been heard of, since a very long time. Many competitors still wonder if they are for real, and also say that there is a high chance of them falling too. But either ways, what remains the fact is that, the company has successfully managed to reach this stage and that too, faster than any company.
But during their course, they have also attracted many challenges as well.
A while back, the Securities & Exchange Board of India (SEBI) had gone after Indiabulls not once but three times on suspicion of malpractices taking place at the group. However, on all three occasions, the company managed to come out with a clean chit.
During 2006’s IPO scam, SEBI had ordered a ban on Indiabulls on charges of trying to corner shares during their allotment. But Sameer was successfully able to convince SEBI that the IPO shares stacked in their accounts were those of clients and not the company’s, and managed to remove the order and the ban in less than 24 hours.
Recently, Sameer who prefers to stay away from media, also came out and spoke about all the false allegations that had surrounded the market for a while.
- Awarded with the Presidential Award for ‘The Fastest Growing Company’ by NAREDCO (2014)
- Awarded as the “Best Employer Brand” for its human resource practice by The Institute of Public Enterprises (2012)
- Awarded as the Best HFC of the year at ASSOCHAM Real Estate Excellence Awards (2013)
- Awarded with the status of a Business Superbrand by The Brand Council (2008)