From tech investing to tires: the path of a rising private equity star

Anish Pathipati has spent years honing his skills as a private equity investor, and now he’s decided to “hang out for a bit,” launching his own fund, Simha Partners.

The last time we spoke to Pathipati for our 2018 Wall Street Rising Stars series, he was a principal at North Island, a private equity firm founded by Silver Lake co-founder Glenn Hutchins. He then joined Periphas Capital, co-founded by Sanjeev Mehra, co-founder of the private investment arm of Goldman Sachs.

He’s applying what he learned from these big-name investors to inform his plan for Simha Partners, which raised $45 million for its debut fund earlier this month, Pathipati said, adding that it was oversubscribed. He’s also trying something different, investing all of the fund’s capital to create a single company in a single industry: tire and auto repair.

Unlike backers looking to buy a blue-collar business after working in corporate or investment roles, Pathipati will have help from his two other partners: Pathipati’s father, Narendra “Pat” Pathipati, and another close family friend, Tim O’Day,

O’Day and Pathipati became CEO and CFO of Boyd Group Services, the parent company of auto collision market leader Gerber Collision & Glass. From the time O’Day became president of Gerber Collision & Glass’s U.S. operations in September 2008 until his retirement in the spring, Boyd’s stock price increased 100-fold.

O’Day and the elder Pathipati, who retired as CFO in 2022, have decades of experience building an auto collision business. And now, with the help of young Pathipati’s technology investment expertise, Simha Partners will look to replicate this success in the tire and auto repair sector.

Pathipati spoke to us about the impetus for Simha Partners’ strategy, how it compares to the growing search fund trend, how his career led to this, and what it’s like to work with his father.

The following conversation has been edited for clarity and length.

How did your path lead you to start your own business?

I knew from day one that I wanted to become an entrepreneur and I have gotten closer to that goal with every step of my professional journey.

The first phase was an institutional training at a large-cap company, Silver Lake Partners. The second phase was what I call my apprenticeship, working closely with legendary startup investors. The third phase is now underway with the launch of Simha Partners, where I become the captain of my own journey.

In the first phase, my approach was to work as hard as possible at this premier institution. Working on deals like Dell’s take-private helped me quickly acquire the tools of the investor’s trade.

During the learning phase, the key to success was choosing to work with people I respected and 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 is 40 years old, how can we innovate?

What are you looking to do differently at Simha?

I call this our modern-day industrial vision. The goal is not to have 15 or 20 different portfolio companies, like a traditional private equity firm, but rather to focus on building one platform, getting it to stand on its own with an autonomous management team, and then doing the same for platform two or platform three.

To achieve this, I am accompanied by two associates with a more operational background.

They have grown an exceptional business through a consolidation strategy, implementing a program of acquisition, integration and operational excellence that Tim and Pat helped develop.

Few private equity firms have partners with this type of operational experience, and especially not in the lower middle market, where we hope to start.

With our first fund, we will focus exclusively on the tire and automotive service industry. This shows target companies that we are not just tourists to the sector and allows us to focus our attention on a single sector, as opposed to a typical PE partner who is pulled in many different directions.

The scale is very different, but this focus on building a business rather than a larger fund reminds me of the phenomenon of a growing interest in research funds as the industry becomes institutionalized and more corporate.

When building the Simha vision, I asked how we were different from a research fund. A key difference is that our capital is fully committed, unlike a research fund which must return to its investors. This allows us to present ourselves very differently to target companies.

A second difference is scale. With $45 million in commitments and a multiple of that amount available through the co-investment request, our fund is much larger than a traditional research fund.

Third, we do not plan to run the company ourselves as CEO. 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 technology investor fit into this context?

The best competitive advantage comes from combining technology with real-world operations. The tire and automotive service industry is ripe for the application of technology in its operations. This affects all aspects of the business, from customer-facing workflows such as scheduling and vehicle inspections, to internal workflows such as recruiting technicians and ordering tires.

Technology cannot replace an auto mechanic, but it can enable the mechanic to serve customers faster, cheaper and better.

What was it like working with your father?

It truly is a dream come true. My father has always been my closest mentor and biggest advocate – the opportunity to work with him is special. But if anything, it made me work even harder. No time is off limits when your father is your partner.

I am also very excited about the opportunity to work with Tim. I have known him for over a decade and in addition to being an exceptional executive, I consider him a friend of the family.

This has also been very valuable to our business, as many of the targets we would consider investing in are family businesses themselves. We can actually act, not just talk, right? We can tell our targets that we have the capital of a private equity firm, the focus of a business builder, and high-level operational experience, but that’s one family and one family friend talking to another. »