- October 16, 2023
- Posted by: CFA Society India
- Category:In Conversation With
Industry Expert: Litesh Gada, CFA, Founder, Aureus Assets And Director, CFA Society India
Interviewed by: Parvez Abbas, CFA, Member, Public Awareness Committee, CFA Society India
CFA Society India had the pleasure of interviewing Litesh Gada, CFA for its current edition of member newsletter.
Parvez: You have vast experience in the field of valuation and transaction advisory. Tell us more about your professional journey.
Litesh: I started my career as an Associate with PwC (M&A Tax and Regulatory) where I got an opportunity to work on some interesting transactions like restructuring business of 2nd largest Real Estate company in India before IPO of INR 50 billion, inbound & outbound investment ideas pertaining to various industries and geographies etc.
Then I moved on to SEAF India (Private Equity Fund) where I was part of the investment team. At SEAF, I developed in-depth understanding of businesses. Being part of the investment team, I got opportunity to recommend investment opportunity to investment committee, prepare financial models, recommend remedial measures on problems in portfolio companies, set-up AIF and work on legal documents.
I later joined SREI (VC Fund) as a Fund Manager. I was responsible to raise a USD 100 million fund. However, within 2 weeks of joining SREI, IL&FS collapsed (India’s Lehman moment). It triggered a liquidity crisis for NBFC and SREI was forced to put the fund on hold. This was a blessing in disguise where I decided to venture out on my own and started Aureus. Aureus Assets is a financial services firm providing services like Business Consulting, Valuation, Transaction Advisory and Research.
I have served an Independent Director on Board of PEN India. I was awarded with ‘40 Under 40 Alternative Investment Professionals in India’ award by the Indian Association of Alternative Investment Funds (IAAIF) in January 2018.
Parvez: How has the CFA program helped in shaping your career?
Litesh: CFA is highly regarded in the finance industry and has helped me a lot. It provided a strong foundation of knowledge and analytical skills that helped in valuation and investment decision making.
CFA offers a global network of finance professionals who have earned the CFA charter. Being part of this network has provided opportunities for networking, knowledge sharing and career connections.
I have been an active volunteer with CFA Society India since a long time. I joined as a volunteer for the Professional Learning (PL) committee (Mumbai chapter) and due to my active participation was later promoted to Co-chair of the PL committee. Volunteering provided opportunities to develop and enhance a wide range of skills, including communication, leadership, teamwork, problem-solving, networking, and project management.
I was recently elected as a Director on the Board of CFA Society India where I am responsible for Career Services Committee. Serving on the board is a learning experience in itself. We learn new skills related to governance, strategic planning, organizational management, and develop and showcase leadership skills which are valuable in our career.
Parvez: Valuation involves judgement and assumptions based on large amount of data. At times, human minds get swayed away by emotions. How do you address behavioural biases and bring rationality in your investment decision-making?
Litesh: The first step in addressing behavioural biases is to recognize them. Educate yourself about common biases, such as overconfidence, loss aversion, confirmation bias, and anchoring. Awareness of these biases can help you identify when they may be affecting your decisions.
Before making investment decisions, take a moment to assess your emotional state. If you find yourself feeling overly optimistic or fearful, consider stepping back and giving yourself time to cool off before making a decision.
Develop a clear and systematic set of criteria for your investment decisions. This can include factors like financial ratios, valuation metrics, and risk assessment. Stick to these criteria rather than making decisions based on gut feelings or emotional reactions.
Utilize quantitative analysis and investment tools to reduce reliance on subjective judgment. These tools can provide objective data and analysis to support your decisions.
Consider stress-testing your investment thesis. Ask yourself what could go wrong with your investment and how you would react in various scenarios. This can help you prepare for unexpected events and reduce impulsive reactions.
Even the most seasoned investors can fall victim to behavioural biases. The key is to develop a disciplined approach to decision-making, continually educate yourself, and seek support and feedback from others to help you stay rational and make more informed investment choices.
Parvez: You have worked on many transactions involving alternative assets. What are the challenges you face in valuing these investments and how do you overcome those?
Litesh: Valuing investments can be a complex process and various challenges can arise during the valuation process. Overcoming these challenges often requires a combination of sound methodology, data analysis, and judgment.
One of the primary challenges in valuation is obtaining accurate and up-to-date data. Rely on multiple data sources to cross-verify information. Use historical data and trends to make informed assumptions.
Some investments, such as private equity lack a liquid market making it challenging to determine their fair value. Use valuation models tailored to illiquid assets. Consider discounted cash flow (DCF) analysis, comparable transactions, or market multiples
Changes in accounting standards or regulations can impact the way investments are valued. Stay informed about accounting and regulatory updates. Adjust valuation methodologies as needed to align with new requirements.
Economic conditions and geopolitical events can impact the valuation of investments. Stay informed about global economic developments and their potential impact on investments. Consider macroeconomic variables and scenarios in your valuation models. Adjust assumptions as necessary in response to changing conditions.
The use of complex valuation models introduces the risk of model error. Validate models regularly and calibrate them using historical data. Perform sensitivity analysis and scenario testing to understand the model’s limitations.
Effective valuation requires a combination of technical expertise, judgment, and a disciplined approach. It’s important to adapt your valuation process to the specific challenges presented by each investment type and continuously update your methods to reflect changing market conditions and regulations.
Parvez: Technology has become an integral part of the investment framework. How do you embrace technology to address the psychological factors?
Litesh: Embracing technology to address psychological factors in investment decisions can be highly beneficial. Technology can provide tools and solutions that help investors overcome behavioural biases and make more rational decisions.
Robo-advisors use algorithms and technology to provide automated investment advice and portfolio management. They can help investors by removing emotional decision-making from the equation.
Technology can facilitate the assessment of an investor’s risk tolerance in a more systematic and unbiased manner. Advanced data analytics and visualization tools can help investors make sense of vast amounts of financial data.
While technology can be a valuable tool for addressing psychological factors in investment decisions, it’s important to recognize that it is not a panacea. Investors should still exercise caution and critical thinking when using technology, as algorithms and models are not infallible and may have limitations.
Parvez: How do you stay updated on the latest research and developments in the field of investor psychology?
Litesh: Staying updated on the latest research and developments in the field of investor psychology, like any specialized area of knowledge, requires a proactive and continuous effort.
Subscribe to publications like the Journal of Behavioural Finance, Journal of Finance and Journal of Economic Psychology. Join professional organizations related to finance and investment such as the CFA Society India, which may provide access to research publications, webinars and conferences.
Explore blogs, forums, and online communities dedicated to behavioural finance and investor psychology. Engage in discussions and collaborations with peers, colleagues and mentors in the finance field.
The field of investor psychology is continually evolving, so it’s important to maintain a curious and inquisitive mindset. Regularly exploring these resources and engaging with others who share your interest in the subject will help you stay updated and informed about the latest research and developments.
Parvez: What is your advice to candidates and CFA charterholders aspiring to make a career in valuation and transaction advisory?
Litesh: Develop a strong foundation in finance and accounting. Practical experience is crucial in valuation and transaction advisory. Seek internships or entry-level positions in firms that specialize in these areas.
Build a strong professional network. Attend industry events, join relevant associations and connect with professionals through platforms like LinkedIn. Networking can help you learn about job opportunities and gain insights from experienced practitioners.
Valuation work often requires meticulous attention to detail. Be prepared to scrutinize financial data, conduct thorough due diligence, and ensure accuracy in your analysis and reports. Effective communication is essential, as you’ll need to convey your findings and recommendations to clients, colleagues, and stakeholders. Work on your written and oral communication skills to present complex concepts clearly and persuasively.
Uphold high ethical standards in your work. Valuation and transaction advisory professionals often deal with sensitive information, and integrity is paramount in maintaining trust with clients and colleagues.
Building a successful career in valuation and transaction advisory may take time. Be patient and persistent in your job search and career progression.
The field of valuation and transaction advisory is highly competitive, but it can be rewarding for those who are dedicated and well-prepared. Continuously developing your skills and knowledge while building a professional network can significantly enhance your prospects in these specialized areas of finance.
About Litesh Gada, CFA
Litesh Gada is the founder of Aureus Assets which provides services like business consulting, valuations, transaction advisory and wealth management. He is a qualified Chartered Accountant, Company Secretary and a CFA charter holder. Litesh has over 14 years of experience in leading Private Equity investments, Investment Banking, Merger & Acquisition (M&A) transactions in the consumer, retail, real estate and agro sectors. In the past, he has worked with organizations like RSM & Co (merged with PwC), PwC India, Chess Capital, SEAF India and SREI Alternatives. He was awarded with ‘40 Under 40 Alternative Investment Professionals in India’ award by the Indian Association of Alternative Investment Funds (IAAIF) in January 2018. He has been a long distance runner since 2009 and has participated and successfully completed many full marathons and half marathons.
About Parvez Abbas, CFA
Parvez Abbas is working as an Assistant Director in the Lending Services division at Acuity Knowledge Partners. He has more than 14 years of experience spanning across investment research, credit solutions and structured products. He has served clients including global banks and asset managers providing assistance in securitization, credit risk management and portfolio analytics. In the past, Parvez has worked for Cians Analytics, Genpact and American Express. He is an MBA finance and a CFA charterholder.