Leading the pack is ICICI Ventures (I Ven), which acquired US-based Radiant Research for about $65 million in June this year. The fund is now looking at similar investments in South America, Eastern Europe and the Asia Pacific. It has roped in the top five Indian pharmaceutical companies as partners, including Wockhardt and Dr Reddy’s. Along with these companies, I Ven will purchase CROs worldwide and integrate them as one single entity called Swiss Biosciences. Similarly, Kotak Private Equity is doing the rounds of investment bankers to build something similar. An investment banker, who did not wish to be named, said, “Kotak PE wants to build a chain of clinical research organisation by acquiring companies in the US, Europe and India.” Sources say UTI Venture Funds is also contemplating the same. […]

Quite contrary to investment guru Warren Buffet’s term ‘deal flippers’ for private equity companies, ET Intelligence Group concludes that private equity money is good money. In 1999, Warburg Pincus picked up a stake in an emerging company called Bharti Tele-Ventures. By ’01, it had invested close to $300 million in a company yet to make a profit. Sceptics sniggered and there was a time when the company’s stock price plunged lower than the issue price, However, Warburg remained confident and finally, the bet paid off. When Warburg sold its stake, it walked away with a profit of $1.3 billion. It was a landmark deal, in that private equity (PE) became a force to reckon with. From $1.1 billion invested in 60 deals in ’04, to $7.9 billion in 302 deals in ’06, PE has grown by a whopping 600%. In the first half of ’07, 200 deals worth $6.82 billion had been announced. It’s likely that the total investment will touch $10 billion by the year-end. Blackstone, Carlyle, Farallon, Chrys Capital, Morgan Stanley and Temasek are some companies that have committed millions to the India Growth story. Some have entered as venture capitalists, which generally focus on early stage investments, while others are pure PE buyouts. PE has come a long way from providing fuel (funds) to the fiery growth of India Inc. It helps investee companies with a whole host of activities — from forging strategic alliances to assisting in corporate governance, from providing management advice to budgeting. To understand the PE impact on India Inc, ET Intelligence Group decided to scrutinise the performance of companies receiving PE funding. We did this by tracking deals concluded before January ’07, since it’s too early to comment on companies that received money in ’07. We analysed data for approximately 100 listed companies, spread across sectors like gems and jewellery, tea, shipping, aviation, edible oil and garments, to name a few. We compared the performance of companies receiving PE funds with those of their peers in the corresponding ET sectoral indices that did not get any such funds. […]