Bessemer Venture Partners, a U.S. venture-capital firm, plans to invest $350 million of its new $1 billion fund in India, one of the world's fastest growing economies.
The fund, Bessemer Venture Partners Global Fund VII, closed Thursday and had been significantly oversubscribed, according to the firm.
BVP managing partner Rob Chandra sees India as an excellent investment destination for the long term.
“India is going through profound change in its economy,” Chandra said Thursday in a phone interview from Mumbai. “It's deregulating and embracing capitalism. This deregulation is fuelling a lot of prosperity. It's fuelling jobs.”
“India is still a society that's very capital starved,” Chandra said.
With a population of 1.1 billion, India has a booming economy. Its GDP grew a whopping 9.2% in 2006 and is projected to grow at about 9% this year.
“On the back of buoyant equity markets and fresh equity issuance, foreign institutional investment at nearly $9 billion so far in 2007 has (already) exceeded total inflows in 2006,” Eurasia Group analyst Seema Desai said in a research note Thursday.
In Mumbai, the benchmark Sensex stock index has gained 13% this year. Read more.
India's government is anxious to raise funds for infrastructure development in India to finance its half-a-trillion-dollar investment plan over five years, Desai said.
Bessemer's strategy in India
Chandra said BVP's India plan revolves around three broad themes.
“First, the growth in consumption by middle-class Indians,” he said. “Second, increased investment in infrastructure. Third, we invest in companies involved in exports of skill-based products, taking advantage of India's excellent base of intellectual capital.”
Chandra said that foreign investment has been focused on taking advantage of the high technology skills in the Indian workforce. “That's clearly the industry that's gotten the most attention to date,” he said, “but we're seeing the same phenomenon in pharmaceutical, auto-components, and financial services.”
Bessemer has invested in 12 Indian companies to date. Among them is Shriram EPC, a Chennai-based engineering company involved in building power plants, windmill towers and other facilities.
Playing on the theme of rising consumption by the middle class, BVP has also invested in the country's fourth-largest hotel chain, Sarovar Hotels & Resorts. Similarly, it has put money into Venus Remedies, a pharmaceutical company.
BVP's investments in Indian companies have ranged from $3 million to $25 million in size over the last three years, and Chandra said he expects to maintain that strategy.
“Relative to other places, there's not enough capital (in India),” Chandra said. “There are still opportunities to buy into companies that are growing.”
Source : MarketWatch