Tenneco Clean Air, the manufacturer of auto components, went public last week. Aside from being an important moment for the company, that instance was an important outlier.

It listed with a premium close to 27% at a time when many Indian firms backed by private equity have had weak debuts. Its anchor book—pre-IPO share allocation to major institutional investors—was oversubscribed by 170X.

The US parent of Tenneco Clean Air is owned by Apollo Global Management, an asset management firm based in New York. 

Other companies with similar PE backing haven’t fared so well in recent times. Sona Comstar, for instance, went public in 2021 with a P/E multiple of 79—far higher than Tenneco’s 29—courtesy of its backer Blackstone. The stock is currently well below its peak, which it hit in six months after going public.

Here’s a fact: private equity has underperformed the S&P 500 index over one, three, and five years, according to McKinsey & Company. This category of investors in India extract value from their portfolio companies before they head to the bourses, leaving little opportunity for public investors.

The Ken editor Seema Singh shines a light on the situation in this week’s edition of Make India Competitive Again, as read by Brady Ng.

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