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Small and medium-sized enterprises (SMEs) have begun to attract more attention from private equity (PE) investors looking to bet on what they view as small shops with large potential. Specialized SME funds worth nearly $500 million (Rs2,050 crore) have been raised or announced for the Indian market in the past 12 months, and this money will be deployed over the next three-five years. SMEs—companies whose average revenues are between Rs50 crore and Rs200 crore per year—are somewhat under-served by PE investors. Most investors active in India play either in the start-up and early-stage space or in the large-cap (market capitalization) segment. Deal sizes in the SME space look similar to most large-cap PE deals done in the Indian market at present—mostly in the $5-15 million range. But the similarity ends there. […]
Private equity firm Avigo Capital Partners has typically invested in companies that make vaccines, hoses and semiconductors. Now, it has invested in the youth garment brand Spykar Lifestyles Pvt. Ltd, thereby joining the club of PE investors eager to tap consumer-driven businesses. This is New Delhi-based Avigo’s first investment in a consumer business; 25% or $31 million (Rs127.1 crore) of its $125 million India-specific Avigo SME Fund II will go to this segment. In all of 2006, consumer-driven businesses accounted for 17.17% or $391 million of the total $2.27 billion PE investments received by Indian companies, according to US-based financial data provider Thomson Financial. In the first half of this year alone, $275 million in growth capital has already gone to 13 consumer-driven companies—making it 20% of overall deal spend. […]
India’s real estate sector may see only as much as $1.2 billion (Rs4,920 crore) in private-equity deals by the end of this year, as investors opt to spread their investment over several years, mirroring the duration of the projects, and belying expectation that billions of private capital will be used up this year alone. That’s barely 20% of the estimated $6 billion queuing up to invest in the real estate market during the current year, with more than a dozen private equity firms scouting for investment opportunities. […]
'String of pearls' deals account for nearly 80% M&As. Jain Irrigation Systems bought a 50 per cent stake in Israel’s NaanDan Irrigation Systems a fortnight ago. The total acquisition cost, including a future investment of Rs 42 crore, was only Rs 87 crore. But it will help Jain Irrigation emerge as the world’s largest drip irrigation company in two years. The Jalgaon-based company (net sales Rs 1,208 crore) has been buying what investment bankers describe as a “string of pearls” for the past year. Before the Israeli acquisition, it scooped up three US-based firms — Chapin Watermatics Inc, Cascade Specialties Inc and Aquarius Brands Inc. […]
Investors with big cash and a roving eye seem to be getting interested in private equity deals in the retail pharmacy, wellness and healthcare companies. A deal or two have taken place already, while loads of enquiries seem to be pouring in. Since these are early days, the numbers are far and few. Elaborating, a leading retail consultant Technopak Advisors chairman Arvind Singhal said: “Private equity players, who have been looking at investment in malls, are now looking at new gen retail ventures in pharma & healthcare services since they are much more lucrative, the turf is yet to get crowded and promises higher returns.” […]
Sebi registered venture capital and private equity (PE) funds may be allowed to bid for infrastructure projects if the government accepts the recommendation of the Deepak Parekh committee on infrastructure financing.
As of now, these funds cannot bid for projects, … […]
Brokerages are increasingly investing in small-caps starved of capital. Private equity (PE) funds floated by Indian brokerages are making big inroads into the world of smaller companies as bigger PEs stay away from them. Brokerages such as Motilal Oswal, Religare, JM Financial, Edelweiss, Anand Rathi Securities, IDBI Capital Markets, which together manage over Rs 2,600 crore, are seeing opportunities in the small-cap space, providing the much-needed expansion capital to entrepreneurs, who otherwise find it tough to raise funds to meet their capital requirements. […]
Gridstone Research, an equity research start-up in Mumbai, had secured venture capital funding from three investors last March. The investors included Charles River Ventures, Helion Venture Partners and finally Maverick Capital, a $10 billion (Rs41,000 crore) American hedge fund. What appeared then to be a one-off has now become a bit of a trend. Hedge funds are fast penetrating India’s private equity market and, since mid-2005, have concluded 36 deals worth $1.7 billion. And, this is just a partial estimate, based on deals that are publicly known. The actual numbers, industry experts say, is likely to be much higher. […]
It's happening all over the industry. Professionals, after working through the corporate ladder for quite some time, are taking a plunge into entrepreneurship. The sector that's witnessing the trend most is the private equity fund management. Recently, a breakaway team from Citigroup and Citigroup Venture Capital International is targetting to raise a $125 million private equity fund. The fund will be managed by Samara Capital Management, and has been put together by Sumeet Narang, Gautam Gode and Radhika Dubash, who have held top positions in Citigroup and Citigroup Venture Capital International. […]
Venture capital firms, led by Silicon Valley’s best of breed, have raised close to $2 billion (Rs8,000 crore) for investment in India since January 2006, according to informal industry estimates. The money will be invested in seed and early-stage companies over the next four to five years. This is indeed small compared with the estimated $10 billion that private equity (PE) firms have allocated for India during the same period, but an important step towards reviving start-up funding in the country. Start-up funding almost disappeared after venture capitalists (VCs) burnt their fingers in the 2000-01 Internet bust. […]
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