Bhanu Choudhrie is founder of C & C Alpha Group, a leading family-run private equity business with business interests around the world, including real estate, aviation, banking and technology, hospitality, healthcare and utilities. Founded in 2002, it is headquartered in London and serves as a holding company for private investors who have been involved in venture capital funding for more than 30 years. It has a history of successfully incubating young businesses. Here, he gives The Wealth List an insight into his business career:
What are your main areas of focus for the business this year?
The aviation business excites me most. We have a pilot training center in the Philippines and UAE and we are seeing a huge surge in demand. At the Singapore Air Show in February, Boeing predicted we would need another 637,000 pilots in the next two decades to keep up with the growth in air traffic. The demand is greatest in south east Asia because of the increasing affordability of air travel and rising incomes as the middle class expands; it accounts for over 30% of total demand. Airlines have ordered new aircraft worth hundreds of billions of dollars.
Our business is based in the Philippines and we work across the region. Our training is accredited in countries such as Vietnam and Cambodia. We are working with airlines in Malaysia and Hong Kong. I would like to see Alpha Aviation doubling its growth in 2018.
We are seeing greater demand in the US too. More than 30,000 pilots are due to retire in the coming years and fulfilling the demand for newly trained pilots is a huge undertaking. We see this as a strong potential market for Alpha Aviation and our training academy.
The other business sector that interests me is financial services. We are expecting to complete our exit from Atlantic Coast Financial Corporation in America during the first half of 2018 and that will allow me to focus my time on financial services in the US, looking at other regional banks and fin tech companies. There are so many opportunities. BankMobile, the digital division of Customers Bank, has enjoyed huge growth with Millennials by offering a completely new banking experience. Bricks and mortar banking is dying; the revenue generated from bank branches does not justify the rents they have to pay. Digital platforms can discount their customers’ fees because their costs are so low.
Taking a five-year horizon, which other sectors are exciting you most?
Renewable energy is interesting. What Elon Musk is doing with Tesla could be a game changer, revolutionising the way energy and electricity is generated, stored and utilised. I would like to spend some time focusing on this.
Residential real estate will offer some interesting new opportunities. Shared living will become a major phenomenon, especially amongst young people who cannot afford to buy or rent a property in cities but don’t want to be stuck in the suburbs. Community environments will offer an alternative way of living; you only pay for your room but share the costs of all other facilities. WeLive is leading the way in the US, creating shared living spaces for young executives who are unwilling or unable to pay for an apartment. I’m sure this is an idea that will take off in the UK before too long.
How confident are you about the general UK economic prospects for 2018?
I am very pessimistic, I think the UK will go through a very difficult time over the next three years. There is so much uncertainty and instability and the business leaders I speak to are confused and concerned. Brexit will push up costs for business and no one knows how the political scenario will play out. We won’t see any business or employment expansion, we will see less M & A, because people don’t know where this will all lead. Of course, if things look to become more positive then businesses will move very fast to change direction, but for now people will be cautious. Americans who invest in the UK are concerned about exchange rates and currency fluctuations and that’s putting people off.
If the UK is facing a difficult time, where else do you see opportunities?
India is a very strong market, with a young population, a growing economy and a dynamic approach to business and enterprise. I have strong family ties in India and we have a very successful hospitality business there, Shanti Hospitality. We have strong partnerships with the Hyatt chain and Starwood Hotel, which is part of the Marriott Group. We play a major role in the hospitality industry and want to grow further. I think more British firms should be trying to trade with India; we have a shared language and there is still a huge reservoir of goodwill towards Britain, which should make a broader trade deal possible once we have left the EU.
How would you characterise your own business philosophy?
Always look at the long-term opportunity. Take a business where you can see the long-term potential, then put in a management team you can trust to execute your strategy. We have a longer timeline than most private equity companies, which gives us more flexibility about when we exit a business. We don’t have to exit after a fixed period, which might not be the best time. For example, we incubated Alpha Hospitals, a specialist provider of psychiatric care, for more than 10 years before selling to an American firm, Cygnet Healthcare for £95m. Equally, we can exit a business earlier than we originally envisaged if we feel we have realised the potential.
It is also important to give the management team a stake in the equity. If you do that, your interests are aligned and you have a shared ownership in the success of the business, whereas if you employ hired guns they have no interest in realising long-term value.
You work closely with your brother, Dhairya, who is executive director of Shanti Hospitality – is it possible to have business disagreements without them becoming personal?
We have a simple rule: we keep business strictly for the office. We don’t take it home with us when the children are around or on holiday. When we leave the office we are brothers, we are family. If we need to take time out to work through an issue we wouldn’t do it at home, we would book a room, put our work hats on and deal with it in a business-like environment. My mother is the anchor of the family, she always invites us round for lunches and dinners and makes sure we all come along – and you can’t say no to my mother!
You are a director of the Choudhrie Family Foundation – which aspects of the Foundation’s work Philanthropy excite you most?
We put a lot of money into medical research at the Columbia University Medical Center in New York, where my father had a life-saving heart transplant 19 years ago, and the Brigham Women’s Hospital in Boston. We are blessed to have my father with us today and we are funding research into serious, genetic heart conditions diagnosed in childhood, or which can even be traced back to the time of the mother’s pregnancy. This research has the potential to save hundreds of thousands of lives.
The other area of philanthropy that excites me most is when you find a way of making it an extension of your business. For example, Alpha Aviation could provide educational grants to train aspiring young pilots who could not otherwise afford the training programme? Once that young pilot has been trained at our Academy, he or she will get a job with an airline which will earn money for their family and that, in turn, will be shared with their wider community. It creates a virtuous circle.
What do you most enjoy away from business?
Riding horses are my passion. I used to be very good at show jumping, dressage and polo and I would love to have made a career of it. But it’s like business – you have to focus on it properly to make a success of it and, sadly, I don’t have time for that now.