Logistic sector is the new favourite of private equity (PE) as Blackstone, IDFC, Reliance Capital are busy signing deals and acquiring stakes across logistics companies. Moreover, firms like Biyani's Future Capital and ICICI Ventures are also busy launching dedicated funds for investing in logistics. Future Capital's logistics fund worth $700 million to $1 billion will set up warehouses across India and ICICI Ventures' new fund of $3 billion is setting aside money for logistics companies. According to a report by Venture Intelligence, the investments in shipping and logistics accounted for 22 per cent of total deals by number and 11 per cent of the deal value in 2006-07. “There is a big demand for infrastructural development and transport is an integral part of it and returns too are good,” said Luis Miranda, President & CEO, IDFC Private Equity Co Ltd. […]

The near-shutdown in the market for initial public offerings (IPOs) this year will generate opportunities for funds investing in early-stage companies, a veteran Asia investor said Tuesday, as companies seek alternative sources of capital. While it takes time for unlisted firms to rein in valuation expectations after the long bull run, Baring Private Equity Partners chief executive Jean Eric Salata said the climate for making attractive growth capital investments is ripening as competition wanes. “The IPO markets are dormant right now, so taking companies public is challenging, but for us that’s really a pretty big opportunity,” said Salata, whose firm manages around $2.5 billion (Rs10,125 crore) and focuses on taking stakes in early-stage firms. […]

Sometime last year, the monetary policy authority wrote to the Government and the capital markets regulator indicating its uneasiness with private equity flows. In the overall hierarchy of flows, the Central bank places private equity well below other forms of capital such as remittances and foreign direct investment. In fact, it has said that the classification of private equity flows would have to be looked at closely considering that in some cases, investors had exited quickly without staying on even for the medium term. These concerns and estimates of private equity investments topping $10 billion in 2007 had prompted the Government to write to SEBI. The finance ministry wanted the regulator to collect data relating to investments by private equity funds and based on that, to ascertain whether there were any regulatory concerns. The aim was to revisit the issue after an analysis. But private equity fund managers here who were fretting at the thought of being policed, need not worry at least in the near term. For, the capital markets regulator has made it clear that it is not equipped to collect the data on private equity. Rather, the Central bank, which monitors all inflows and outflows, is far better positioned to carry out this task, it has said. Since private equity could come in several forms, such as through foreign venture capital funds, it has been suggested that the RBI could be mandated to track these flows […]

Only professionals are likely to be allowed to float venture capital funds (VCFs) in the future . In what could be a big change in India’s venture capital regulations, no business house, financial services group or big corporate would be allowed to set up a VCF. The capital market regulator has veered around to this view, possibly driven by instances where large groups have used the funds they have sponsored to invest in companies where groups have strategic or business interests. “Since VC funds operate under a special regime in relation to taxation, foreign capital and investment lock-in , and are meant to encourage new entrepreneurs, the vehicle should not be misused by established players,” said a source. While no formal guidelines have been issued, the change in regulatory stance on VCFs follows views expressed by an informal panel to look into VC regulations. Some of the top names in the financial services industry figure in the panel. No final decision has been taken. Existing VCFs set by business houses and banking groups will not be affected. The perceived conflict of interest, though not applicable to all VCFs sponsored by big groups, is more apparent in sectors like real estate where institutional finance is difficult. […]

The year 2007 turned into a remarkable one for Indian M&A, both at home and abroad. Spending more money on overseas acquisitions than foreign companies did in their own market, Indian companies have made their presence felt globally. Domestically, 2007 saw another record year of deal activity, with total mergers and acquisitions (M&A) and private equity (PE) deals up 82 per cent from Rs 865 billion ($21 billion) in 2006 to Rs 1,576 billion ($38 billion) in 2007. As well as volume, both number (867 against 697) and average size of deals also rose significantly. International acquirers have continued to account for the bulk of domestic deals at Rs 1,189 billion ($29 billion). This is 75 per cent of the total domestic deal value as against 71 per cent in 2006. But the real story of the year is overseas, where Indians bought up companies in Europe and the US, splashing out some Rs 1,367 billion ($33 billion). […]