Why Vertical Integrations is the Secret Behind Wall Street Veteran Anilesh Ahuja’s Planned Community
Updated: Oct 12
Originally posted on: Why Vertical Integrations is the Secret Behind Wall Street Veteran Anilesh Ahuja’s Planned Community
The next great innovation in city planning might come from the business world. At least that is what how it seems, watching former Wall Street banker Anilesh Ahuja as he moves forward on a new kind of community development in India.
Known as Solitaire Valley, the township that Ahuja’s company is developing in India will be a state-of-the-art community that will provide housing and amenities for 14,000 residents from luxury houses to low-income homes.
The community will feature a variety of next-gen solutions for recycling, community betterment, child welfare, and carbon neutrality, all of which have been carefully considered to help foster a sense of cohesion and purpose for the town’s residents.
But just as innovative is the business side of the development.
Under the lead of Anilesh Ahuja, Solitaire Valley aims to implement the business concept of vertical integration to reduce building costs and increase efficiencies.
If successful, the move could spawn a wave of new developments built with a new kind of business acumen all across India.
Vertical integration happens when the same company controls multiple levels of production, such as when a potato chip company owns the fields where their raw material is grown. It is a strategy that produces clear advantages, such as lower production costs, simpler logistics, and a tighter control over quality concerns.
But how does it work for a planned community?
For Anilesh Ahuja and Solitaire Valley, it happens when the developer controls more levels of the process, including the design of plans, the production, and the movement of materials.
“We have all the engineers, sales, finance, accounting, marketing, everything is under the same umbrella,” Ahuja said. “The only thing we ask from the outside vendors is construction. The actual construction labor comes from a third party. Everything else is in-house. Even make our own cement.”
But it does not end there. The idea of vertical integration extends into Solitaire Valley’s function as a landlord and home seller. Instead of dealing with several real estate companies, agents, private owners, and leasing agents, home buyers and renter only have to do business with Solitaire Valley.
The process is decidedly simpler and can pass cost savings to the home buyer.
“If you just think about it from a vertically integrated point of view, my goal was and my desire was to create the whole life cycle of a person’s experience and time in the home,” Ahuja said. “When you first start off, you either rent or take a mortgage, usually you take a significant amount of mortgage. When you rent with us, you take one of our homes in the rental program. And then when you are ready to buy, we will give you a mortgage to be able to buy the same house.”
How it Started
Anilesh Ahuja began thinking about the benefits of vertical integration once he made the transition from working for others to launching his own hedge fund in New York.
When he started Premium Point in 2008, he relied on old connections to fund his company. But as the business expanded, he realized it could make more by bringing more parts of the process in house.
“This is a phenomenon that happens is that when you meet someone when you are younger in your career. They might love you, but they still think of you as that junior person. And then the concept was, ‘Well, Ted, I’m not that junior kid you remember me as maybe something entrepreneurial.’ And he said, ‘Done. We will fund you.’ That is when my fund was born,” Ahuja said. “And that took a different path, I mean, different iterations, where we became $2.5 billion of assets under management. We had a very, very amazing list of investors, from university endowments to sovereign wealth funds, to some of the largest private wealth families in the country, in the world… And if you think about any business you want to vertically integrate and just touch the consumer and take the margins out along the way.”
When Ahuja came to Solitaire Valley, it made sense to capitalize on the same strategies that worked so well in the world of finance—even though his new endeavor was in a very different kind of country.
“These are very modern concepts for where we are, very important for the future. And doing things for the community, which is, I think, fantastic,” he said. “I mean, giving them space for kids to be kids. Play instead of just running around the cars. I thought that it was very important, and these are major decisions that are being made. And then expanding the company into multiple verticals. And then if we just think about it is that all my experiences of the past have now given me the skills to now create a company with multiple verticals in terms of different avenues of revenue coming in, different services to the community, making things that are geographically and vertically diversified, and then going public.”