Gaurav Mathur's India Equity Partners, $350 million fund invested $8 million in Bangalore-based Ikya Human Capital Solutions earlier this month. Ikya operates in the human resources (HR) services business and offers executive search, contingency recruitment, staffing and training solutions. Such companies, many agree, could be the next genie from the bottle that private equity would latch on to. “The deal (Ikya) could very well be the beginning of a trend, what with one of the main bottlenecks for growth across various sectors being the difficulty in finding the right people,” says Arun Natarajan, founder and chief executive officer of Venture Intelligence, a provider of information and networking services to the private equity ecosystem in India. […]

After the Bharti Infratel deal, India could see more group approach in PE investing. Private equity firms in India are going `clubbing’. Earlier this month, eight private equities, led by Temasek Holdings, an investment arm of the Singapore government, decided to band together to invest around Rs 4,800 crore in Bharti Infratel, the tower arm of the Bharti Group. While a group approach in investment is not unusual in the private equity space (Temasek itself had invested in Matrix with Newbridge), the latest deal, which valued Bharti Infratel at Rs 40,000-50,000 crore, stands out for two reasons: first, an eight-way deal is a rarity all over the world; and second, it was the largest `club deal’ by private equities in India. While Temasek put in Rs 2,000 crore, US private equity firm Kohlberg Kravis Roberts & Co put in Rs 1,000 crore and the other six put together committed the balance Rs 1,600 crore. The six firms are the Investment Corporation of Dubai (ICD), Goldman Sachs, Macquarie, AIF Capital, Citigroup and India Equity Partners (IEP). […]

The venture capital sector is jittery as Budget 2008 draws near. VCs, especially the domestic ones, were in a state of lethargy since Budget 2007, when ‘pass through’ status was granted only to investments in specific IT and biotech areas. And the plan to bring overseas M&As involving Indian companies under the tax net, that too with retrospective effect from June 1976, is making them even more worried. “Taxing M&As will be a very retrograde step. The world now sees us as a developed economy and we should behave in that manner. It will be totally unfair to tax M&As, that too in retrospect,” says president of TiE Delhi Saurabh Srivsatava. “The government should also restore the pass through status as it was earlier, as it does not make any material difference to tax authorities. But, for the industry, it’s making a complete mess,” he adds. Another thing worrying the VCs is the government’s move to ‘plug loopholes’ in the Mauritius DTAA (Double Taxation Avoidance Act) because all their acquisitions/investments in India are routed through Mauritius. Many major VCs, like Canaan, Helion, Clearstone and Sequioa, invest in India through routes like Mauritius. According to estimates, VCs invested about $900 million through this route till last year. Other tax havens with which India has a treaty are Cayman Islands, Singapore and more recently Luxembourg. […]