| In a major boost to the private security business in the country, global private equity (PE) major DE Shaw has picked up a 14 per cent stake in Delhi-based Security and Intelligence Services (SIS) India Ltd for an undisclosed amount. |
| However, market sources peg the deal at around Rs 450-500 crore. This is the first time a foreign hedge fund has invested in this sector in India. |
| SIS, which was set up as an investigation firm almost 30 years ago, has grown into a security solutions provider, offering manned guarding, investigations, electronic security systems and cash in transit services to over 2,000 corporate customers across 24 states in India. It has a workforce of over 28,000 men and supervisors and 400 managers. |
| “We are now planning to scale up our operations. We are targeting acquisitions and eyeing the overseas market,” said Rituraj Sinha, chief operating officer, SIS. Sinha said the company is planning to foray into the markets in the Middle East. “Initially, we will offer manned guarding services and later diversify into other activities,” said Sinha. |
| Scaling up operations on the domestic front, he said, would be done under a two-pronged strategy. “We are planning to diversify our portfolio. We are planning to get into facility management services that include cleaning and housekeeping services,” he said. |
| “Also, we will tap the inorganic growth channel and look for entities that can add value to SIS. We are finding companies that have a strategic fit with SIS,” he added. |
| Robust economic growth has boosted the business support segments such as logistics and security, which are growing with the growth of the bigger industry. This explains the increased PE interest in the security sector, which has already seen major PE deals. |
| The industry witnessed its first PE placement in 2005 when Rakesh Jhunjhunwala picked up 16 per cent equity in Topsgrup, a Mumbai-based security firm. In August this year, ICICI Venture and Indivision, the PE arm of Future Capital Holdings, together picked up 16.46 per cent equity for Rs 140 crore in the same company. |
| “The demand for security services has been steadily growing as, for companies, security has become a major issue. Since the PE players want to tap the opportunity, they want to invest in the sector,” said Ranjan Biswas, partner, Ernst and Young. |
| Biswas said a 200-300 per cent hike in the PE investment in security firms could be expected in two to three years. |
| “Even though the sector is unstructured, around 15-20 companies are on the PE radar,” he said without disclosing the names. |
Source: Business Standard