Private equity's (PE) big fish are finding it hard to crack deals in India that are respectable by their standards. Last month saw Blackstone striking it big with investments in Gokaldas Exports ($170 million) and Nagarjuna Constructions ($150 million). But that was an exception. Such big-ticket transactions have not been easy to come by, especially for those with a mandate to invest only giant sums. Data compiled by Venture Intelligence, a research service focused on PE and venture capital activity in India, shows that 77 per cent, or 232 of the 302 PE deals in India in 2006, were in the sub-$25 million range. Of these, 104 were in the $10-25 million range, 55 in the $5-10 million band, and 73 were of the sub-$5 million variety. The biggest PE deal in India so far has been one by Carlyle – a $650 million investment for a 5.6 per cent stake in Housing Development Finance Corporation. General Atlantic's $18 million investment in Daksh eServices in 2002 was among the lowest. As a result, some PE firms are viewing India as a different market and are willing to scale down their minimum threshold levels here. […]

Although 2007 is likely to be another landmark year for private equity (PE) in India, the level of PE activity, currently estimated at around $10 billion, could increase and needs to increase multifold given India’s current GDP growth. To achieve this, regulations and taxes need to improve and the PE community needs to project itself in the market that it is a source of finance that contributes to the growth plans of entrepreneurs, helps generate employment and improves corporate governance. Having said this, PE financing is steadily gaining more acceptability amongst Indian promoters. This indicates a ‘leap of faith’ for closely-held traditional Indian family-owned and managed businesses, which until a few years ago, had viewed private equity financing as a possible interference in their business. The recent investment by Blackstone in Bangalore-based garments company Gokaldas Exports demonstrates this leap of faith. Blackstone has acquired a controlling stake from the owners. This transaction symbolises a traditional promoter-family run business partnering with a large private equity fund to accelerate its growth plans. This transaction demonstrates that Indian promoters are recognising the value that a PE brings to the partnership and PE investors are being viewed as ‘partners’ to the business. […]

Reflecting the buoyancy in India Inc's quest for global mergers and acquisitions, the country's largest private lender ICICI Bank today said it will have a role to play in 70 per cent of the deals that are expected to be about 35 billion dollars in aggregate during 2007. “Indian companies made overseas acquisitions worth 20 billion dollars in 2006, a level crossed during the first six months of 2007 itself… this year even on a conservative note overseas mergers and acquisitions are expected to reach 30-35 billion dollars,” ICICI Deputy Managing Director Chanda Kochhar told a news agency in an interview. “ICICI Bank's involvement — be it advisory, lending or syndication of loans — accounted for 70 per cent of the deals in the first half of the year and we hope to maintain this market share,” she added. Kochhar, ranked 30th in Fortune list of world's most powerful businesswomen, said the Bank also helped companies raise 24 billion dollars in overseas borrowings last year. It was quite possible for ICICI to be counted among the top 25 global banks, she said. […]