The Accidental Entrepreneur: Baburaj Pillai, Founder, AROHI

Baburaj Pillai is a name to be reckoned with in Asia. Our research shows that his influence can change boardroom decisions! Yet he is modest with no ostentation. He controls vast networks from businesses, investments, to even policy circles. His decisions ripple across industries, yet his name is seldom in headlines because he avoids publicity like a plague. He believes external validation can distort even the most disciplined and attributes his success to luck and relationships more than smarts.

 In an exclusive to Entrepreneur APAC, the reclusive entrepreneur shared his success philosophy.

“I am an accidental entrepreneur,” says Pillai, the founder and chief investment officer (CIO) of AROHI, a global investment firm based out of Singapore.

Founded in 2006, AROHI is a value-driven investment firm, focused on delivering sustainable top-tier returns through deep business understanding and a concentrated portfolio. It is a long-only, bottom-up asset management firm, with investment in companies across Asia, excluding Japan.

Twenty years on, the founder still wakes up at 4:30 am with the same fire- to back great entrepreneurs and to build AROHI into an enduring intergenerational firm.

“I love investing. In my mid-30s, I realized I wasn’t ready to settle in at a large institution- managing policies and people, while climbing the corporate ladder. I realized I didn’t want to be just a senior executive spending more time in meetings and less time with entrepreneurs discussing businesses. That was the turning point,” he recalls.

Before his entrepreneurial venture, he worked with the Government of Singapore Investment Corporation (GIC) for over a decade. The stint there earned him trust of some of the most respected Asian corporate leaders and entrepreneurs.

In hindsight, he is glad he took the plunge. “When I chose to follow my dream, I gave up the trappings of success and started over again. Many well-wishing friends and colleagues thought my decision was reckless. They were correct in one respect. I was not thinking about the consequences, nor did I do a classical business plan with pros and cons mapped out on a spreadsheet. I simply followed my heart. I don’t recall any fear or angst starting AROHI. Maybe I was too excited. Or maybe as some of my colleagues used to say, when they looked at my portfolio weights, I got guts of steel.  The adrenaline of starting AROHI probably drowned any sense of downside. Sangita’s support and willingness to make life-style sacrifices helped.”

He credits his success to Sangita, his wife, “She always encouraged me to follow my dreams. Without her unwavering belief, I doubt I would have had the courage to leave a successful career at a leading global investment firm and step into the unknown to begin again from scratch.”

AROHI’s mission is to create an ecosystem of trustworthy and exceptional allocators of capital aspiring to make a difference; with an aim to be a top decile compounder of capital globally.

His secret sauce to 20 years of success? “Luck and hard work,” he replies instantly.

“Luck with values driven parents, exceptional teammates, ecosystem partners, wonderful friends, and hard work fueled by passion.”

The word ‘passion’ came up repeatedly in our conversation. “Every successful entrepreneur I have met in my 30-year career has been driven by passion.  They always brought their A game and don’t like to lose. They are optimistic and positive people. Wealth for them is a by-product. Most were very wealthy well before they scaled their business to greatness.”

No growth comes without challenges and AROHI had its fair share. Within a little over a year of founding, he faced the greatest financial crisis (2008) of a generation. Since then, AROHI has navigated multiple storms and the lessons he learned offer valuable insight for aspiring investors and entrepreneurs alike.

“In the early days, we bought average businesses trading at very attractive prices because the IRR math looked compelling. But most of them delivered subpar returns. Today valuation is not a screening criterion for generating ideas,” he says.

So, what does it take to have AROHI’s attention?

“It always starts with the founder.”

“Agar banda acha hain toh dhandheke bare mein sochenge!” (If the person is good, then we will consider the business fundamentals). The firm backs exceptional entrepreneurs building enduring businesses. The strategy is simple, capital compounds through deep research, trusted partnerships with exceptional entrepreneurs and decisive action.

“An ethical, value driven entrepreneur is our core starting criteria. We only spend time with good people running great businesses. And if the valuations don’t add up, we wait patiently (some time for years) for the right price. Most of the time markets do give us a favorable risk-reward entry point, but occasionally, for specific names it may not.  And we are ok with that. In those situations, the joy of building strong relationships with inspiring people is a reward in itself,” he explains.

Two decades on, the team has evolved as a global investment firm. They are driven by, “Independent judgment, curiosity, and continuous improvement. We thrive on cognitive dissonance, strong ownership mindset and sharp judgement. The investment philosophy is to focus on generating returns over the long run by investing in quality businesses run by trustworthy and competent people. Our investors allow us to think and invest for the long term,” he explains.

AROHI is sector agnostic. They evaluate investment opportunities bottom-up, one founder, one business at a time, rather than do top-down industry or thematic research. Researching global best-in-class founders and businesses enables them to evaluate local businesses in a global context.

When asked about his biggest leadership challenges, he said, “We are very disciplined and patient. How do we marry that spike, with a sense of urgency in an environment which is changing fast? How does one strengthen process discipline without letting it become institutional rigidity? How does one retain the wisdom of age while harnessing the audacity of youth. All of these are in a constant state of tension in the investing game and actively managing it is a continuous process and something which we are still learning,” he explains with the intellectual heft of an IIM professor.

Talking about the future and his definition of success Pillai says, “Our goal is to remain trustworthy top decile compounders of capital globally. Our current generation of leaders (early 40s) are much better than my generation of team AROHI. On a five year basis, our leadership’s focus is to ensure that our current 20-year-olds become far superior players in their 30s, than the current generation of leaders who are in their early 40s.”

People familiar with Baburaj say he is a legend! Despite running one of Asia’s best concentrated long-only funds, we found him simple and gregarious. Baburaj Pillai is often considered one of the smartest investors in the room, who has the ability to ask some of the toughest business questions in the nicest possible manner!

And perhaps, his humility and minimalism are also reflected in AROHI’s team and culture.