recent funds raised seem to suggest little has changed from the past. British fund 3i Group Plc. closed a $1.2 billion infrastructure fund on Wednesday that was 20% larger than expected. Yes Bank Ltd, in partnership with Global Environment Fund, secured $20 million from the Asian Development Bank for its $200 million clean energy fund on Thursday. Last month, Helion Venture Partners closed its $210 million, which was 1.5 times its first fund. Pak-Seng Lai, managing director and head of Asia for alternative asset investment advisers Auda International Lp., says, “Our strategy will not be affected by short-term market fluctuations.” Those in the PE business who have a longer track record may even turn away investors. LPs that want to stay in India, but want to go with the safest bet are expected to turn to those funds. “The bad ones go away, and the good ones get bigger and better,” says Rahim Penangwala, who leads LGT’s PE investments in India. […]

No one’s burning rubber up the asphalt these days, at least not on deal street. With a string of deals falling through in the past few months, dealmakers at India Inc seem to be cooling their heels, at least for the time being. Compared to the corresponding period last year, M&As have dried up and their announced valuation in the first three months of this year coming down by almost 71%. And though PE deals have hit the road again after an initial stutter, the buzz in investment banking circles is depicting a different story, that of deals not going through. Sample this: Recently, the retail arm of the Future Group, Kshitij Advisory Services, which formed a strategic JV with CapitaLand, Asia’s largest property group, to form Kshitij CapitaLand Mall Management Co, has been called off. Subsequently, a deal announced in January this year by Mumbai-based shipping major Great Offshore, to acquire the UK-based SeaDragon Offshore for $1.4 billion, is said to be now under review. […]

A technical factor seems to be hindering PIPE (private investment in public enterprises) deals or private investments in public enterprises, which should have been a no-brainer with shares of listed companies now quoting at eye-catchingly attractive valuations. According to rules set by the Securities and Exchange Board of India (SEBI), the preferential allotment of shares (which is necessary to consummate a PIPE deal) have to be done at a price, which is higher of the following two: 26-week average of the weekly high and low closing prices of shares as quoted on the stock exchanges where the shares of the target company are most frequently traded or average of the daily high and low prices of shares during the two weeks prior to the date of the preferential allotment. With such a clause, the price that private equity players have to shell out for stakes in companies is still relatively high. […]

Private equity (PE) firms are smacking their lips at the depths to which valuations of companies have plummeted from their high perch just over three months ago. But some of these firms are plagued with another problem: The climate to raise funds for investing is not at its best. The global credit crisis triggered by defaults on home loans in the US, and the looming recession in that country has sparked scepticism among pension funds, sovereign wealth funds, university endowments, family offices and others who serve as the main sources of funding for these private equity firms. “Raising funds is much tougher now. It means many more phone calls, more meetings, more effort,” says Alok Sama, founder and president of Baer Capital Partners, which is in the process of raising a $500 million fund to invest in Indian real estate and infrastructure. […]

India has still not decided on regulations for sovereign wealth funds (SWF). However, existing provisions in the takeover code will be applicable to SWFs, according to Reserve Bank of India governor YV Reddy. The on-lending of foreign exchange reserves through IIFCL to Indian companies abroad will be treated as external commercial borrowings, Mr Reddy clarified. Globally, many countries have floated SWFs, which utilise a portion of their forex reserves to invest in a variety of assets in overseas markets to earn higher returns. Speaking at a session on ‘The Role of Government-owned Investment Vehicles in Global Capital Flows’ in the International Capital Markets and Emerging Markets Roundtable held in Washington DC on Monday, Mr Reddy said, “India has not yet considered regulatory initiatives, especially addressing SWFs. However, existing provisions regarding fit-and-proper or takeover code are applicable to all investors, including SWFs.” India is still at the stage of assessing the pros and cons of setting up an SWF. It is monitoring recent developments on enhancing transparency and disclosure in respect of hedge funds, private equity and SWFs, Mr Reddy said. […]