FDI inflows declined 26% in October this year compared to the same month last year, commerce minister Kamal Nath told the Lok Sabha on Tuesday. Experts attribute this fall after seven months of robust growth to the drying up of investments from countries hit by the global slowdown. The inflows in September 2008 had registered a steep growth of 259% to $2.56 billion against $713 million in September 2007. In contrast, the figure for October 2008 fell to $1.49 billion compared to over $2 billion in October 2007. However, experts caution that a part of the October decline could also be attributed to a higher base in 2007 as FDI flow during the month was almost three times higher than in September 2007. […]

With traditional sources of finance in short supply, most Indian companies, including leading corporate houses, are turning to private equity to raise capital. Private equity is looking more attractive as factors like the ongoing credit crunch, tighter lending norms imposed by banks and slowing demand have forced companies to prioritise their capex plans. According to a cross-section of big ticket PE firms ET spoke to, PE investments could gross $10-12 billion in the next financial year. While this may be less than the previous year, it is a substantial amount in the middle of a global downturn. Investments would start flowing once promoters begin to align valuation expectations to the corrections in the market, officials at a number of PE firms said. […]

As private equity (PE) firms find it difficult to raise capital in difficult economic times, they are offering limited partners (LPs) more incentives to put in their money. Making the most of the situation, LPs are now demanding a greater say in the use of and returns on the money they commit to PE firms. LPs are entities that include public and corporate pension funds, insurance companies, high net-worth individuals, and university and other endowments that are the source of money for PE firms, which then establish funds to invest. PE fund investors Mint spoke with said LPs have collectively turned cautious, are demanding more rights, and subjecting those raising funds to intense scrutiny. “LPs are now negotiating terms on the fee and share of profits that the fund can take home,” said Sandeep Aneja, chief operating officer and managing director of Milestone Capital Advisors Pvt Ltd, a Mumbai-based real estate fund that is raising a $400 million fund from overseas, and has commitments of $220 million. […]

The terror attacks that rocked India's financial capital may depress stocks, dampen tourism and slow new investment, but are unlikely to inflict long-term damage on the nation's economy, analysts and business people said Thursday. “This is a challenge for the government to maintain law and order in the country,” said Takahira Ogawa, director of sovereign ratings at Standard & Poor's in Singapore. “At this stage, I don't think there will be any major impact on the macroeconomic or fiscal position of the government.”Indeed, Mumbai has a long history of terror attacks — and has managed to bounce back from them. A series of bombings in July 2006 killed 187 people. Chandiok said Indian companies are going to have to take security issues more seriously going forward, and Grant Thornton's India office has already begun a review of its policies. […]

As buoyancy transformed into nightmare in the global financial market, Indian private equity players, for whom the exit through initial public offer (IPO) seems impossible, are exploring the ways to find an exit from their investments. Secondary deals, exercising drag-along rights and stake sale to FIIs, all of which are not so common in Indian PE scenario, are expected to increase in the recent future as floating IPO by the companies remain a fantastic idea in the current market tumble. In 2007, about 95 IPOs were floated, out of which 16 PE players made the exits. However, this year, as of today, about 9 PE exits were made out of a total of 36 IPOs. Two months back, through a secondary deal, Azim Premji had bought a 10% stake in Subhiksha. This transaction was done by Premji’s personal investment entity Zash Investments Ltd from ICICI Ventures, a private equity arm of ICICI Bank. Subhiksha has indefinitely deferred its IPO plan. […]