US-Based Bessemer Venture Partners, which recently closed its seventh global fund at about $1 billion, has earmarked $350 million for Indian investments, especially in companies that cash in on the rise of consumer spending, infrastructure development and intellectual property-based opportunities, a senior official said.
The investment house is also in advanced talks with one company each in construction, power and renewable energy sectors, as part of a plan to increase its portfolio by as many as 25 investments through the India-specific fund from the current 17, BVP India managing director Devesh Garg said. The proposed investment in the construction firm could be in the order of $25 million while that in the other firms could be up to $15 million each, he added.
“The consumer class in the country is definitely on the move up. Hence, we are more interested in investing in branded products and services,” Garg told ET in an interview. “Secondly, the country’s government looks dead serious about infrastructure development. Hence, there is scope for companies involved in construction, roads, power generation, which is why this sector also attracts us in India. Finally, we would like to invest in companies involved in exports of skill-based products, taking advantage of India’s excellent base of intellectual capital.”
While venture capital and private equity funds investing in India have focused on information technology, telecom and outsourcing companies in the country, Bessemer wants to turn its attention to other sectors that are likely to see explosive growth in the coming years, he said.
BVP’s investments include Shriram EPC, a Chennai-based engineering company that builds power plants, windmill towers and such facilities; Lloyd Electrics which makes coils and Motilal Oswal, a financial services company. BVP’s investments in the country were between $3-25 million in size over the last three years, and Mr Garg expects to maintain that strategy.
Venture capital firms invested about $130 million across 20 deals in India during the first quarter of 2007, according to a study by Venture Intelligence. As many as 14 of these deals, worth a total of $73 million, were in IT and IT-enabled services industries. Also 45% of deals in that quarter were in growth stage companies, and the rest in early stage ones.
Source: Economic Times