Since retiring in 2007 from KhattarWong, one of the largest full-service law firms in Singapore, Sat Pal Khattar has been actively leading his family investment company Khattar Holdings, where he has parlayed decades of experience as a lawyer, company director and public servant into a myriad of investments in the areas of finance, logistics, IT, pharmaceuticals and real estate. A sizeable portion of the investments are in India.

With an eye on legacy, he has roped in his two sons – London-based Navin who is himself a lawyer, and Singapore-based Arvind. His daughter Shareen showed entrepreneurial smarts from young. She set up Marmalade group of restaurants which has since been sold to the Far East Organization.

“I had to decide if I wanted to do law until the later part of my life. I decided it wasn’t what I wanted, being dependent on clients who were not necessarily loyal to you, chasing bills, forever meeting time constraints. I wanted to spend time to teach my sons about investments, so they can learn from my mistakes and have a little bit of success.”

KhattarWong last year entered into an alliance with Withers, and is now called Withers KhattarWong.

The 74-year-old is looking into a “fairly large” investment in Malaysia. “A lot of people are shying away from Malaysia and that gives us opportunities.” He is also sizing up opportunities in Indonesia.

Here are investment tips from the legal eagle:

1. The choice of business partners is crucial.
One of his early investments was a stake in HDFC Bank in India, which has grown to become one of the largest private sector banks. He had helped introduce the bank to a Singapore bank as a potential investor which the latter turned down. “My friends asked me – would you like a small share? It came with conditions which we could comply with so I said yes. We did very well out of that. That spawned the rest. We went from one, two and then 50 investments now.

“The economics (of a business) must make sense. Without that you’re a pig in a poke. But in India where the legal process is so dilatory, you need to be sure that the person you invest with is honest and will try to meet his commitments. The choice of partner is very much more important than pure economics.

“In India the cost of capital is high. Borrowing rates are between 12 and 18 per cent, so companies are happy to share profits with you as a shareholder rather than borrow from a bank. Sometimes capi- tal is unavailable. For us it makes sense. We borrow at 2 to 4 per cent,and we can get a return of 20 per cent. Sometimes 20 per cent is not great because the rupee devalues but you learn to deal with it.”

2. Investment is never with a view purely to make money.
“Yes, it is harder to find a niche you can make money on. Investment is never with a view purely to make money. You must also see that the person or group you have invested in will also benefit. Where the opportunities are less, then it is much more difficult to find a good relationship.

“The opportunities are always there even now in Singapore, but it’s harder… The last 10 years were good because interest rates were low so you can borrow at a low rate. But when rates go up to 5 or even 8 per cent, it will be even more challenging.

3. Review investments regularly.
Direct capital investments are long term in nature, but the family also invests in liquid stocks and bonds. “That’s the recurrent part to meet our expenditures. We do listed securities, private equity and bonds in a meaningful way.” He chairs a weekly meeting to track the portfolio. PE (private equity) funds, he says, provide an opportunity for exposures that would not normally be accessible such as distressed securities, investments in Africa or South America.

“Every week we look at the portfolio. There is no such thing as investments of a permanent nature. In the real world we’re all dead anyway.”

4. The learning curve never ends.
“There are cases where in hindsight you know you should never have done it. But to me it’s part of the learn- ing curve. You must keep faith in yourself. You can’t be right all the time.”

5. Wealth is not an end in itself.
“Wealth is a means. There is no particular satisfaction in wealth for the sake of wealth. You can’t take a cent with you when you die. But you want to leave this place a little better than what you found it. And you hope you can inculcate the same values in your children so they are not spoilt, and they know how to deal with human beings, to find good values for the next generation and to do the right thing at the right time.”

On teaching his children, he says: “The investment side, they learn by observing you and sharing your experiences. But you want to teach them values – that’s more by assimilation and observation rather than forcing them to have the values you have.

“We don’t always share the same views. Some- times we disagree and that’s fine. I’d rather they talk to me and argue, but we must respect each other and do what we think is right.”

Adapted from The Business Times.