Research conducted by the global research and analytics firm, Evalueserve, shows that if current trends continue, India will receive US $13.5 billion in Private Equity (PE) funding during 2007, ranking it among the top seven countries in the world. And, forecasts show this funding could rise to almost $20 billion in 2010 – a thousand-fold increase since the $20 million invested in 1996.
In its newly released report, “An Indispensable Guide to Equity Investment in India”, Evalueserve claims there are over 366 investment related firms currently operating in India and another 69 have raised – or are in the process of raising – funds and are planning to start their operations soon. In total, these PE firms seem to have amassed US $48 billion earmarked for investment in India between July 2007 and December 2010. “Several firms that we talked to also mentioned they would be willing to invest even more if they saw good investment opportunities,”
However, beyond the tech-heavy activity that has driven much of the earlier investment opportunities, there are many new areas that private equity and venture capital firms are now aggressively looking to invest in. These include manufacturing, financial services, healthcare, real estate and construction. However, Evalueserve cautions that a solid understanding of the unique Indian market and some behavioral adjustments will be required from investment players who are new to India in order to maximize returns for their investors. In addition to the required capital, proper research in a challenging market, subtle and savvy managerial skills, and a healthy dose of patience must also be invested to ensure success.
Editor’
o PE Firms have already raised US $48 billion earmarked for India between July 2007 and December 2010.
o Three groups of rapidly growing sectors:
Global Rapid Growth – IT, BPO, KPO, Drug Research and Clinical Research Outsourcing, Engineering Services Outsourcing, etc,
Indian Domestic Market – Retail, Travel and Hospitality, Healthcare, Entertainment, Education
Manufacturing and Infrastructure – e.g., Automobiles, Automotive Components, Electrical and Electronic Components, Speciality Chemicals, etc.
o Opportunities for PE’s Investing in India: Cherrypick companies who do well from BSE-100 and BSE-500 companies. Indian government will open the banking sector to competition and liberalize other sectors like metals & mining, utilities & capital goods, attracting more PE, VC, and Hedge Funds. Investing in Indian Family run businesses will require different management techniques and patience in the increasing M&A trend in India.
o Best Practices in PE Investments:
