Set back by the economic downturn, foreign and domestic private-equity firms in India are spreading the risk of investing in assets by banding together. Firms are resorting to clubbing together to form a syndicate when acquiring stakes to limit both funding requirements and risk. “Over the next 12 months, there will be much more syndication of deals and the insistence (by the lead investor) of having other co-investors to bring additional risk bearing capacity,” said Jasmin Patel, Managing Director, FIL Capital Advisors (India), Fidelity's India-focused private equity and growth capital fund. “The capital required to get a funded firm to a certain maturity point has gone up, so the presence of another investor from a growth perspective and the amount of capital required is becoming a prerequisite,” Mr. Patel said. Syndication is where two or more private equity firms participate in investing in a company, each putting in part of the total equity package for proportionate amounts of equity — usually with one private equity firm acting as lead investor. […]

As stock markets around the world continue to tumble, private equity (PE) players are sensing an opportunity in the foreign currency convertible bonds (FCCBs) issued by Indian companies. Most of the FCCBs are trading at a discount of 30 to 70 per cent now. And given the tight financial situation internationally, many investors could be desperate to raise cash by selling them. Some PE firms are looking at companies whose FCCBs are maturing in the near future. Vedika Bhandarkar, managing director and head of investment banking, JP Morgan India said, “If it is a fundamentally good company and the bond is available at a huge discount, it makes sense to go for it.” […]