The government is set to limit foreign direct investment (FDI) in private security services at 49%, a decision likely to trigger consolidation and ownership change in the Rs 10,000-crore domestic security services industry. Several foreign security firms currently have presence in India. The development is expected to help home-grown security firms like SIS and Tops to consolidate their position in the fast-growing sector and force foreign players like Group4S to restructure their holdings and offload the surplus FDI in favour of domestic players. The domestic private security industry, growing at 25% annually, employs over 7 million. Thanks to the lack of specific rules, any foreign company can hold up to 100% stake in Indian security companies. The Union home ministry has now stepped in to limit their participation in Indian companies citing security reasons. […]

Digital advertising and e-commerce firms in India are catching the fancy of private equity (PE) and venture capital (VC) firms. PE and VC investments in the online advertising and marketing space, which had gone down to $16 million in the first half of 2009, have shown a recovery and touched $28 million, or Rs 129 crore, in the first half of this year. Talking to ET, Mahendra Swarup, president, Indian Venture Capital Association, said: “Both PE and VC firms are active in the online advertising and marketing space. In fact, VC funds are more active in the sector as returns are higher. Typically, expectation of VC and PE firms is three-to-five times of their investments. But, in the case of digital advertising and marketing, which largely deal with mobile ad network, the expectation is 8-12 times of the investments.” The deal size in this sector varies between $5 million and $15 million. […]

Private equity (PE) deals in listed companies are set to rise if the Securities and Exchange Board of India (Sebi) approves the Achutan Committee’s recommendations on the takeover code. However, buyouts are likely to dwindle, say major PE players in the country. According to estimates, lack of good opportunities has kept around $30 billion PE money waiting to be deployed. “The 25 per cent mark is positive, as PEs want to take their stake beyond 15 per cent in companies they invest in,” said Shahzaad Dalal, vice-chairman and managing director, IL&FS Investment Managers. Among the BSE 500 companies, 98 have single public shareholders with 10-14.99 per cent holding, according to a study by SMC Capital. For such investors, the upward revision of the takeover threshold limit can be a huge opportunity to increase their holding to 25 per cent without an open offer, say analysts. […]