When the promotor family of retail chain Nilgiris dragged the private equity (PE) investor, Actis, to the Company Law Board (CLB), it was the culmination of a dispute that had been simmering for nearly two years. The differences related to many aspects of the business, starting with the pace of expansion to the kind of merchandise the stores should sell. Nilgiris, present in South India for close to 100 years, divested 65 per cent to the UK-based fund for $65 million nearly three years ago. This was after bitter differences among the family members on whether a PE investor should come on board. The story of Indian family businesses running into trouble with their PE investors is not new. Industry watchers say that while no specific reason can be given, these tensions are inherent in the difference between the way traditional families run businesses and the approach of global PE investors, who have their own systems and procedures. […]

The country is likely to get several more new generation private banks with the finance minister announcing that RBI is considering new bank licenses to promoters in the private sector and also NBFCs if they meet RBI eligibility criteria. A host of Indian corporates likes Tatas, Birla group, and some of the older NBFCs have been interested in a banking licenses. Among finance companies, Reliance Capital and Indiabulls have announced their interest in getting into banking. Lenders such as Exim Bank and SIDBI were also interested in a banking licence. If such a move happens this would be the first time post 2002 that RBI would look at such a move. […]

Delays in getting approvals and complex regulatory environment in the country are major factors impeding private equity (PE) flows into the infrastructure sector, says a study. Delay in financial closure of infrastructure projects and non-transparent bidding processes are other reasons hampering PE flow into the sector, a joint study by industry chamber ASSOCHAM and audit firm Ernst & Young said. Absence of vibrant bond markets in India is also a handicap for private equity investment unlike other developed nations where they (bond markets) serve as an alternative avenue for financing and re-financing, the study said adding that the bond market in India has not grown substantially. […]

Big-ticket private equity investments are set to see a revival in 2010, driven by an improved business environment and increased investor confidence. In fact, the trend seems to have already begun, if one looks at the deals closed in the first couple of months of the year. In mid-January 2010, a consortium of private equity firms, including Baring, Sequoia Capital, Fidelity and Deutsche Bank, acquired a 16% stake in infrastructure-EPC company Coastal Projects for $54.8 million. Early February saw the largest investment of the year so far, with Quadrangle Capital and a few others pumping $300 million into Towervision India. And that’s not all —the market is abuzz with more such deals that are in the final stages of negotiations and are expected to be closed in the coming months. […]

Pakistan’s largest private school chain, Beaconhouse School System, and Indian private equity (PE) firm New Silk Route Partners (NSR) have a unique relationship. The Lahore school, run by the Kasuri family, one of the oldest political families in Pakistan, raised money from NSR a couple of years ago and in turn gave the PE firm its first taste of investing in India’s troubled neighbourhood. NSR now wants to invest one-third of its $1.4 billion (Rs6,510 crore) corpus in firms in Pakistan, Sri Lanka and Bangladesh—the fear of risks bowing to the draw of higher returns. And with Sri Lanka more stable after ending decades of internal strife with the Tamil Tiger rebels, NSR is already evaluating potential deals with mobile phone companies and banks in the island nation. The Beaconhouse deal, in a way, set a trend for India-centric funds to look at the country’s neighbours and other developing nations in Asia for high-return deals. […]