|
|
The government is likely to bar foreign venture capital funds (VCF) from investing in compulsory convertible debentures (CCD) and other quasi-equity instruments. Officials rewriting the norms governing foreign venture capital investor (FVCI) plan to restrict investments to pure equity. Sources said the new definition of venture funding would ensure they are directed towards equity that has risk associated with it. Fundamentally, venture funding is associated with risk as its aim is to finance startups and upcoming entrepreneurs. However, there is a view among the policymakers that venture capital funds have been avoiding the risks associated with funding startups and going in for more secure forms and avenues of investments such as debt and listed securities. […]
The Insurance Regulatory and Development Authority’s (Irda) move to allow insurance companies to invest in venture capital (VC) funds could help them raise money more easily, but it could take up to 12 months for insurers to start investing. On Friday, Irda allowed life insurers to invest 3 per cent of their total investible corpus in VC funds or 10 per cent of the fund’s size, whichever is lower. For general insurers, the limit is 5 per cent of their investment assets or 10 per cent of the fund size, whichever is lower. Based on life insurers’ assets under management of Rs 700,000 crore, potentially over Rs 21,000 crore can flow from this segment alone. Canaan Partners CEO Alok Mittal said the move is a good beginning, but does not translate into immediate gains. […]
Two venture capital firms have invested $25 million (Rs109 crore) in Hyderabad-based pharmaceutical retailer MedPlus Health Services Pvt. Ltd in the first publicly known foreign investment in a medical store chain. NEA-IndoUS Ventures, a Santa Clara, California-based venture fund, and an unnamed fund from West Asia have jointly invested the amount in MedPlus for an undisclosed stake, a person close to the transaction said, asking not to be identified ahead of a formal announcement. A top MedPlus executive, too, declined details. “It’s confidential,” said Madhukar Gangadi, chief executive of MedPlus. “At this point of time I am unable to tell you anything.” Since India bars overseas investments in a retail venture selling multi-branded products to consumers, the two foreign funds have invested in MedPlus’ wholesale arm. […]
Competitors are increasingly becoming collaborators when it comes to mergers and acquisitions (M&A) as the credit crunch has made it difficult for corporates to find bridge loans. These strategic buyers are now collaborating with private equity (PE) investors to access funds for big ticket overseas deals. Traditionally, strategic buyers compete with PEs. For example, Tata Motors last year had to compete with One Equity Partners, TPG and Ripplewood Holdings LLC in its bid to buy European luxury brands Jaguar and Land Rover (JLR). The company took a $3-billion bridge loan to finance the deal. […]
Venture capitalists (VCs) raising new funds dedicated to the Indian market are not finding the going tough despite a global slowdown impacting availability of capital. For instance, Clearstone Venture Advisors, a global venture capital fund with over $650 million of committed capital for investment globally, plans to close its fourth fund soon. The fund, which could be over $200 million, will also have a larger share of investments in India. The company had raised $210 million for its third fund, of which 20 to 25 per cent was dedicated for investments in India.Similarly, Seed Fund, which invests in early start-ups, is in the process of raising its second fund. The fund, which will be in the range of $50-60 million, will be closed by the end of this year. […]
Private equity(PE) firms who have been largely focused on providing growth capital in India are now eyeing distressed firms, which has been a domain of the Asset Reconstruction Companies (ARCs). While some of the PE players such as Vision Global, Eight Capital and ClearWater have specialised funds, which are targeting distressed assets, other PE firms are also looking to invest in such companies during these troubled times. According to Vision Global MD Parth Gandhi, “We’re in talks with around 10 such companies. In the next two-months we’ll be able to close in a few deals. With the current slowdown in the economy, a lot of companies have not been able to meet their growth projections and are facing an acute credit crunch. The idea of the fund is to tap such opportunities.” […]
Private equity (PE) firms favour clubbing when it comes to striking deals. Unlike in the past, when PE firms were single investors in a company, they now prefer to join hands in putting money in firms. Early this year, Temasek Holdings, an investment arm of the Singapore government which is the only foreign institutional investor in Tata Teleservices, seemed to be content being one of the investors in an eight-way deal to invest close to Rs 4,800 crore in Bharti Infratel. If eight is fine, then consider Idea Cellular’s transaction. The telecom company struck a nine-way deal with private equity funds, which is probably the largest ‘club deal’ in India by private equity firms. Similarly, Reliance Telecom roped in seven foreign institutional investors including New Silk Route, Galleon, Fortress, GLG, Quantum, DA Capital and HSBC Principal Investments. Although there is nothing unusual about PE firms adopting the group approach, what is striking this time is the coming together of a varied number of investors. […]
Venture capitalists were eager to back advertising start-ups in India during the second quarter of 2008, according to the Quarterly India Venture Capital Report released today by Dow Jones VentureSource ( http://venturecapital.dowjones.com ), which found that $89 million-nearly 37% of the region's quarterly investment total-went to five advertising/marketing companies, more than any other sector. Overall, India attracted $238 million in venture investment with 17 deals closed in the second quarter, a 120% increase over the $108 million invested in 12 deals during the same period in 2007. The data showed that India saw seven second-round deals completed in the second quarter, garnering a record $161 million and exceeding the $118 million that was invested in second rounds in all of 2007. Ten seed and first round deals were also completed during the quarter, accounting for nearly $77 million in investment. No later-stage deals were completed. […]
The recent slide in stock prices has come as a boon for private equity investors, many of who had bought stakes in listed companies via private placements at frothy valuations. Some of these entities are now buying the shares of these companies through the secondary market at lower prices, thus lowering their original cost of acquisition. “When private equity firms see long-term potential in the companies they have invested in, they resort to dollar-cost-averaging when the market corrects. This is what has happened of late,” said Nexus India Capital CEO Sandeep Singhal. Among notable instances of such secondary market purchases, Apax Partners hiked its stake in Apollo Hospitals to 14.52% as on June 2008, from 12.01% in December 2007. In another case, Standard Chartered Private Equity, which had 5.47% stake in M&M Financial in March 2008, raised its holding in the company to 7.93% by June 2008. […]
In India, where individual angel investors are few, firms such as Morpheus and Opdrage, offer start-ups mentorship and aim to create a pipeline of fundable start-ups for investors. With angel firms such as Accel India Venture Fund (formerly Erasmic Venture Fund) and Seedfund raising larger second funds, the firms expect the gap between starting out and getting funded will widen—increasing the demand for their services. “There is enough seed money available in India waiting for quality start-ups,” says Kris Nair, founder, Opdrage Ventures. “We want to be an entrepreneur cooperative.” Nair, a founding member of Satellier Inc., a Sequoia Capital-funded building information modelling start-up, set up Opdrage six months ago, mixing mentoring with investment banking deals. The firm is working with six ventures, including software application company APIster, furniture design store Cubicle One and a modelling start-up that is yet to be named. […]
|
Post your messages.Please refrain from posting offensive messages. IndiaPE accepts no liability for the consequences of your reliance on these postings and messages.
|