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A RS 1,200-crore venture capital fund being set up for investments in small & medium enterprises (SMEs) in the defence sector has run into red tape. The fund has been put on hold by the Foreign Investment Promotion Board (FIPB). Former RBI deputy governor Vepa Kamesam, Lt Gen VJ Sundaram, who is leader of the flight vehicle design team for Prithvi, and Tata Strategic Electronics CEO Rahul Chowdhry are on the advisory board of the fund. A lack of clearance from the defence ministry and “a potential conflict of interest” with the advisors of the company are cited to be the reasons behind the hold-up. This is the first time that a venture fund of such size is being set up for investments in defence SMEs. The move comes at a time when multinationals are vying for multi-billion dollar defence deals from the Indian government, which also include mega orders for fighter aircraft. The fund is promoted by Rajesh Narayan, who was earlier a director and India head (specialist finance) at ANZ Investment Bank. The segments of investment identified by the fund include military aircraft, helicopters, radars, submarines, missiles, rocket launchers, simulators, tanks and torpedoes. Investment would be made in SMEs that are vendors for these products. Many SMEs supply components, technology and designs for such products. […]
As a fallout of the Emaar MGF Ltd share sale that was withdrawn earlier this month after investors stayed away, the private equity arm of Citigroup Inc., which was an investor in the company, has had to abort a proposed sale of Rs325 crore worth of Emaar MGF shares to DE Shaw, an investment firm. Citigroup would have likely gained Rs200 crore from the deal. Citigroup’s stake in real estate developer Emaar MGF was through its subsidiary Citi Venture Capital International. Its deal with DE Shaw was contingent on the initial public offering (IPO) going through with the transfer of shares to be made at the issue price, according to the offer document filed by Emaar MGF with stock market regulator Securities and Exchange Board of India. Confirming that the deal has been cancelled, Ajay Relan, managing partner (regional head, India) of Citi Venture Capital International, a private equity arm of Citigroup, said: “We will now wait till the IPO,” implying a second attempt at fund-raising by Emaar MGF, which has said it will look to raise money when the situation in the market improves. […]
The chief operating officer of Dubai International Capital says the fund is thinking of investing $5 billion in India, China and Japan combined over the next three years. Anand Krishnan said also it's time to buy sluggish Japanese stocks, a news report said today. “It is a good investment opportunity,” he was quoted as saying by Japanese business daily, the Nikkei. The investment company, owned by the ruler of the booming Persian Gulf city-state, has been keen on overseas investment opportunities. […]
George Soros’, Soros Economic Development Fund (SEDF), Omidyar Network, and Google.org today announced that they were working together to create a $17 million (around Rs 68 crore) Small to Medium Enterprise (SME) investment company for India to create job opportunities and spur greater economic participation for a larger segment of the population. This joint investment company is expected to provide capital to small and medium businesses in underserved markets. Most of the existing SME funds make investments in the $3-$5 million range, leaving out a significant portion of this market. The investment company will target this “missing middle” with equity investments between $500,000 and $3.5 million. Many small to medium businesses lack formal funding options because of a market gap between the microloans offered by microfinance institutions and the larger investments of commercial banks and PE funders, said the press release from Google India. […]
After proving to be a bit hit in most Asian markets, private equity (PE) majors are lining up a bevy of ‘mezzanine funds’ for the Indian market. These funds, which are typically debt-dominated instruments with an equity “sweetner”, basically provide medium-to-long term capital to promoters without significant ownership dilution. While from the lenders’ perspective, mezzanine funds offer a measure of downside risk protection, these funds are widely predicted to gain favour with mid-cap Indian firms, where promoters would relish the opportunity of not ceding considerable shareholding while raising funds. ICICI Venture — India’s largest PE firm — is in the process of closing the country’s first mezzanine fund. ICICI Venture’s ‘India Advantage Fund VII’ would offer $110 million in its first round of fund raising, over half of which has already been committed by limited partners. The fund is among the single largest country-focused mezzanine fund in Asia’s emerging markets and the corpus could be scaled up to $1 billion in the second round of fund raising, according to industry sources. Besides, Darby Overseas Investments — the PE arm of Franklin Templeton Investments — has launched the Darby Asia Mezzanine Fund II, which has secured institutional commitments of $300 million and committed investments through an affiliate in Faridabad-based Escorts Construction Equipment Ltd. Kendall Court Capital Partners’ second fund is also said to be eyeing investments in India. […]
US-based private equity firm Clear Trade is in talks with five entities including PFC to sell up to 25 per cent stake in its newly-launched $12 billion India-focused power and infrastructure fund. Clear Investments Power Infrastructure Fund, which starts with an initial corpus of $1 billion, would invest in the country's upcoming power and infrastructure projects. According to Clear Trade CEO Palak Jain, the firm is in talks with five entities including Power Finance Corp, Morgan Stanley and Axis Bank-promoted Axis Private Equity to dilute up to 25 per cent in the fund. Apart from Jain, the fund would be promoted by Clear Trade Managing Director Deepak Kavadia and Philip Ho, Managing Director of US-based private equity fund Cornell Capital. “We plan to liquidate 25 per cent stake in the fund to two of the five entities,” she told media over phone. […]
State Bank of India's subsidiary SBI Capital Markets plans to set up a $100 million (about Rs 400 crore) venture capital (VC) fund to invest in knowledge-based sectors in the country. The SBI Capital Markets has already entered into a 50:50 joint venture Softbank Investment Holdings of Japan for the fund. The India Knowledge Fund will target specific India sectors including IT, knowledge process outsourcing, clinical research outsourcing, nanotechnology, online and mobile businesses, environmental technology and alternative energy, SBI said in its letter of offer filed with SEBI for its forthcoming Rs 16,736 crore rights issue. The fund will invest primarily in unlisted, high growth companies through initial investments ranging from $3 million to $10 million. India Knowledge Fund will be co-managed by both SBI Capital Markets and Softbank Investment Holdings. […]
The legendary buyout fund firm Kohlberg Kravis Roberts (KKR) is setting up its operations in India, and hunting for its head honcho. The fact that KKR is setting up office here, two years after it announced its first deal by purchasing a 85% stake in Flextronics for $900 million, speaks a lot about India’s prospects in attracting private equity (PE) investments. Since inception in 1976, the fund has done over 150 deals through its offices in New York, Menlo Park, London, Hong Kong and Tokyo, and the list does not include China, India’s closest rival in receiving PE investments. An almost dead IPO market and RBI’s stringent norms for raising money through external commercial borrowings and foreign currency convertible bonds are expected to push India ahead of China in the PE space this year, said Rishi Sahai, director, IndusView, which advises MNCs on business opportunities emanating in India. Last year, India made a coup of sorts by overtaking China in PE investments. The trend continues this year. In January, India got PE investments worth $1.2 billion, surpassing Asian giants like China ($609 million) and Japan ($980 million), according to a report by the Asian Venture Capital Journal. Mr Sahai said India’s numbers stood at $1.3 billion against China’s $375 million. Industry experts expect that the country will end up having PE money of $25 billion this year and $50 billion in 2010. […]
Clear Trade, a US-based private equity firm with Indian roots, has floated a $12 billion fund in association with leading US private equity companies to exclusively invest in upcoming power and infrastructure projects over a five year period. Philip Ho, managing director of the US PE firm Cornell Capital, Axis Bank-promoted Axis Private Equity, Morgan Stanley and other leading US funds, including one of the largest PE players in the hospitality sector are participating in this fund. Clear Trade is also talking to some leading European pension funds to join the fund. Power Finance Corporation (PFC) is likely to pick up 20 per cent and has given a letter of intent to join the “Clear Investments Power and Infrastructure Fund”, Deepak Kavadia, managing director of Clear Trade told Business Standard in a telephonic interview from the US. The initial corpus of the fund — set to kick off in the first week of April — will be $1 billion. “We will close this fund within 18 months and raise $2.5 billion. Majority of the investments will be in the power sector, especially thermal projects” he said. Clear Trade has identified about 11 power projects for investments in the first phase, including two projects of over 1000 mw promoted by two leading corporate houses based in Hyderabad and Mumbai, besides two hydro-electric projects coming up in the north east. […]
State Bank of India, the country’s largest commercial bank, is entering the private equity sector by picking up close to 20% equity stake in Sage Capital Funds Management, an asset management company (AMC) floated by Sage Capital. The company has started a $200-million (about Rs 790 crore) fund, Sage Capital Value Fund, that will invest in Indian companies, as a volatile capital market pushes down valuations of firms prompting this class of investors to value-pick stocks in the world’s second-fastest growing economy. This is the first time that SBI has entered the private equity domain, though bank chairman OP Bhatt had hinted at it last year by saying that the bank is talking to strategic partners on a selective basis. SBI had been aiming to deploy about Rs 5,000 crore for private equity, Mr Bhatt had then said. Although SBI officials weren’t available for comment, Sage Capital founder and managing director Manish Kanchan confirmed the bank’s involvement in Sage Capital Funds. “The fund has received positive response from various institutional investors we’ve spoken with across the world. We are happy with SBI’s decision to acquire a stake and expect to leverage multiple synergies with the bank and our portfolio companies,” he added. […]
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