What would you rather lose?

Ramesh Jude Thomas
President & CKO, Equitor Consulting

Last month two defining headlines caught my eye. The first was about the venerable State Bank of India granting a USD 400 million loan to Kingfisher Airlines (ET). The second was the insuring of Christiano Ronaldo’s legs for 90 million dollars.

What attracted my attention about the first was not the generosity of SBI to an airline in the current turbulence, as much as the fact that the loan was secured against the Kingfisher brand. And then the SBI were willing to go out and actually speak about it.

The case of football’s most prized hoofers reminded one of another famous Latino asset that was reported insured a few years ago for over USD 300 million (although her spokesperson chose to finally neither confirm nor deny it).

Why did Ronaldo and Jennifer Lopez decide to insure what they did? And what does this have to do with Kingfisher’s loan?

Let’s begin with the prima donnas. Ronaldo, Jennifer and their respective commercial brains simply focused on those assets that had the highest impact on their value to the world. (For Ms Lopez it certainly wasn’t her voice or her face!!)

Now think of why it made perfect sense for State Bank to safely dole out USD 400 mn against the Kingfisher brand name. Like for Ronaldo and Lopez, this was about the company’s most prized asset. The one that Mr. Mallya would most hate to lose. More than his planes or his breweries.

Companies (and regulators) often miss the point about how value is created and captured. That it is best served by the most valuable assets in their possession. And to find out what these really are, just ask owners what they are most afraid of losing. Malaysia’s oil, Apple’s unique design capability, Coca-cola’s brand name…you get the drift?