Date:30/03/2005 URL: http://www.thehindubusinessline.com/2005/03/30/stories/2005033001481300.htm

Back Private equity investors warm up to India

Virendra Verma

Mumbai , March 29

FOREIGN private equity investors are warming up to India as a key investment destination. Following the hectic activity of foreign institutional investors (FIIs), it is now the turn of foreign private equity investors to focus on India either to invest afresh or allocate more funds to their existing investments.

This time around, they intend to invest in listed companies rather than going in for unlisted companies, a common norm for private equity investors. Private equity includes the equity securities of closely held companies that have not "gone public." Normally, private equity investors buy shares of unlisted companies.

Among the private equity investors that have announced entry into India is the London Stock Exchange-listed 3i. Another private equity investor, The Carlyle Group, has also announced the reorganisation of its Indian investment.

Voyager Capital, a US-based fund, recently launched its India-specific fund with a corpus of Rs 225 crore (approximately $50 million) and will invest in publicly traded companies. The fund is not a private equity investor but it will follow the investment style of one.

Speaking to Business Line, the Managing Director of Carlyle India Advisors (part of Carlyle Group), Mr M. Shankar Narayanan, said India has huge potential for attracting private equity investment. He said some of the sectors that have potential include IT-enabled services, auto ancillary products, engineering and pharmaceuticals.

Mr Narayanan said the firm is open to investing in listed as well as unlisted companies. Within the listed companies category, Carlyle Group plans to invest in companies where it can take a big stake and also sit on their boards. "Our philosophy is to invest in companies where we are in a position of influence," said Mr Narayanan.

Last week, 3i also announced the appointment of Mr Anil Ahuja as the head of its Indian operations. Mr Chris Rowlands, 3i's Head of Group Markets, said, "3i is a growth company and India is a growth market. Anil's appointment will enable us to accelerate our plans in India and further increase the portfolio in the region."

On the need for a fund for India, Voyager Advisors' Managing Director, Mr Shiv Puri, said India is on a secular growth phase led by growth in infrastructure spending and the start of a new capital expenditure cycle, along with domestic consumption, will allow the economy to achieve a compounded annual growth rate of 6-8 per cent over the next decade. The growth in the economy will also lead to strong earnings growth for Indian companies, he said.