Courtesy of Anish Patipathi
- Anish Pathipati was a Wall Street Rising Star in 2018 while working with investing legend Glenn Hutchins.Now, he's launching a new fund, focused on building one big business at a time. First stop: tires.He's bringing along two operational experts, including his dad, as a differentiator.
Anish Pathipati spent years honing his skills as a private equity investor, and now, he's decided to "hang out a shingle," launching his own fund, Simha Partners.
The last time we spoke to Pathipati for our 2018 Wall Street Rising Stars series, he was a director at North Island, a private equity firm founded by Glenn Hutchins, a cofounder of Silver Lake. He then joined Periphas Capital, cofounded by Sanjeev Mehra, a cofounder of Goldman Sachs' private investment arm.
He's applying what he's learned from these renowned investors to inform his plan for Simha Partners, which raised $45 million for its first fund earlier this month, Pathipati said, adding that it was oversubscribed. He's also trying something different, investing all of the capital in the fund to build a single business in a single sector: tire and auto repair.
Unlike search funders who look to buy a blue-collar business after working in corporate or investment roles, Pathipati will have plenty of help from his two other partners: Pathipati's father, Narendra "Pat" Pathipati, and another close family friend, Tim O'Day,
O'Day and the senior Pathipati rose to CEO and CFO of Boyd Group Services, the parent company of auto collision market leader Gerber Collision & Glass. From when O'Day became president of US operations for Gerber Collision & Glass in September 2008 to when he retired over the spring, Boyd's stock price had grown 100 times.
O'Day and the elder Pathipati, who retired as CFO in 2022, have decades of experience growing an auto collision business. And now, with the help of the younger Pathipati's technology investing expertise, Simha Partners will look to replicate that success in the tire and auto repair business.
Pathipati spoke to us about the impetus for Simha Partners' strategy, how it compares to the growing trend of search funds, how his career led up to this, and what it's like to work with your dad.
The following conversation has been edited for clarity and length.
How has your career led you to creating your own firm?
I knew from day one that I wanted to be an entrepreneur, and I got closer to that goal at each phase of my career journey.
Phase one was institutional training at a mega-cap firm, Silver Lake Partners. Phase two was what I call my apprenticeship, working closely with legendary investors in startup settings. Phase three is now underway with the launch of Simha Partners, where I become the captain of my own journey.
In phase one, my approach was to work as hard as possible at this best-in-class institution. Working on transactions like the take-private of Dell helped me quickly pick up the tools of the investing trade.
In the apprenticeship phase, the key to success was choosing to work with people I had great regard for and who I could learn from.
This third phase requires a different mindset from the first two phases. Instead of trying to replicate what others have done, we want to build something new. In an industry that's 40 years old, how can we innovate?
What are you looking to do differently at Simha?
I call it our modern-day industrialist vision. The goal is not to have 15 or 20 different portfolio companies, like a traditional private equity firm, but to instead focus on building one platform, standing it up on its own two feet with a self-sufficient management team, and then doing the same for platform two or platform three.
To help accomplish this, I'm joined by two partners with a more operational background.
They've grown an exceptional business with a roll-up strategy, implementing an acquisition, integration, and operations excellence program that Tim and Pat helped develop.
Few private equity firms have partners with this type of operating track record, and especially not in the lower middle market, which is where we hope to begin.
With our first fund, we will focus exclusively on the tire and auto services industry. This shows target companies that we're not just tourists in the industry, and allows us to focus our attention on one industry, as opposed to a typical PE partner who is pulled in a lot of different directions.
The scale is very different, but this focus on building one business vs a larger fund reminds me of the phenomenon of a growing interest in search funds as the industry institutionalizes and becomes more corporate.
While building the Simha vision, I did ask how we're different from a search fund. One key difference is that our capital is fully committed, unlike a search fund that has to go back to its investors. This allows us to present ourselves very differently to target companies.
A second difference is scale. With $45 million of commitments and a multiple of that available via co-invest demand, our fund is much larger than a typical search fund.
Third, we're not planning to run the company ourselves as CEOs. Search fund entrepreneurs are effectively buying a job, but we want to support a management team that can stand on its own.
How does your experience as a tech investor fit into this?
The best competitive advantage comes from interweaving tech with real-world operations. The tire and auto services industry is ripe for the application of technology in operations. This cuts across every part of the business, from customer-facing workflows like scheduling and vehicle inspections to internal workflows like technician staffing and tire ordering.
Technology can't replace an auto mechanic, but it can allow the mechanics to serve customers faster, cheaper, and better.
What's it been like working with your dad?
It's really a dream come true. My dad has always been my closest mentor and greatest advocate — the opportunity to work with him is special. If anything though, it's made me work even harder. No time is off limits when your dad is your partner.
I'm also very excited about the opportunity to work with Tim. I've known him for over a decade and in addition to being an exceptional executive, I consider him a family friend.
It's been quite valuable for our business too, because many of the targets we would think about investing in are themselves family businesses. We can actually walk the walk, not just talk the talk, right? We can tell our targets that we have the capital of a private equity firm, the focus of a business builder, and top-tier operational experience, but it's one family and family-friend talking to another."
