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On networked access, the report highlighted the extensive networking with industry insiders in the sectors where the private-equity firms operate while on domain expertise. The capacity to quickly implement improvements that turn around their portfolio companies is another capability, the report said. Commenting on the opportunity in India, BCG partner and director Saurabh Tripathi said, “Richness and diversity of Indian market allows for specification of private equity funds along the lines identified in this report – be it expertise in domain, operational improvement or private networks.” […]
If it's any consolation, it's not just you who have lost money in the market. Even the so-called market-savvy have. One subset in the latter group is private equity (PE) funds, many of which are banging their heads for indulging in a bull market phenomenon called private investment in public enterprises (PIPEs). Most such PIPE deals, in which PE players took stakes in listed companies, lured by the phenomenal market run in the last five years, have come a cropper. The embarrassment gets magnified when you consider that a PE fund's traditional mandate is to buy into unlisted companies, and create value in them. An analysis by DNA Money of data provided by Venture Intelligence shows that, of the 51 PIPE deals in India in 2007, 33 have lost money. That's more than 60 per cent of the transactions. […]
Venture capital firms in India are finding themselves in a bit of a predicament. They are eager—and have money—to invest in green technology. But there appears to be very few companies with interesting business models or innovative technology in the relatively nascent segment. Clean and green technology typically includes any energy, water, transportation, manufacturing or agricultural technology that keeps the environment clean by making emissions less toxic or by reducing waste. The technologies typically include recycling, water purification, sewage treatment, remediation, flue gas treatment, solid waste management and renewable energy. According to a Dow Jones VentureSource report, venture capitalists invested $2.5 billion in 159 US clean-tech deals in 2007.While many funds have talked of resources available at their end for such investments, no significant deals have been announced so far this year in India. “We are keen on investing in this segment but are not able to zero in on the kind of companies that would interest us enough. As a venture capital firm, we are looking at defensible innovations and execution skills, but there have not been any so far,” says Alok Mittal, managing director, Canaan Partners. […]
Despite the current turmoil in the global credit Markets, private equity will continue to be an important source of capital, said a study conducted by the Boston Consulting Group (BCG) and the IESE Business School of the University of Navarra in Spain. P Harshavardhan, partner and director at BCG pointed out that smaller private equity deals of about $10 million were getting out of fashion as compared with the majority deals that are taking place in the $100 to 500-million range. “India, with her strong underlying fundamentals will continue to attract greater flows of capital from private equity Companies. With likely softening of equity Markets, in the coming years, private equity funds will have to build capabilities to deliver value through operational improvements and will not be able to count on multiple arbitrage that worked well in the past few years,” said Harshavardhan. There were 1,750 private equity deals that took place between 2000 and 2006, added Harshavardhan. […]
Japanese conglomerate Itochu Corporation has bought around 30% stake in Mumbai-based Rajendra Plastics (RPPL) from the Punamiya family for nearly Rs 90 crore, putting the valuation of the plastic bag maker at Rs 300 crore. This is the Japanese company’s first investment in the growing plastics industry in India. Neemit Punamiya, managing director, RPPL, confirmed the deal, but declined to divulge its exact size. “They (Itochu) have bought 29.94% stake in our company. Their expertise in international operations will help us improve our corporate governance and provide us with better technology in manufacturing and marketing. The association with the Japanese giant will also help our exports. Their exposure and experience may lead to diversification into allied products and services.” Itochu officials could not be reached for comments. Post deal, the promoters will hold over 70% stake in, and retain management control of, the privately-held company. The sale proceeds will be utilised to double the company’s annual capacity to 44,000 tonne by next year. […]
The rise in the cost of debt across global markets will force the private equity (PE) business to build value through operational improvements and growth, rather than from leverage, according to a joint study by The Boston Consulting Group (BCG) and Europe-based IESE Business School. The study, The Advantage of Persistence, said that though the global credit crunch has led to a drop in large PE deals, it is unlikely to curb the sector’s long-term growth as the basic elements of the business model remain intact. The PE sector is expected to achieve an annual growth of 15-20% until 2011. “India will continue to attract PE capital,” said Harsh Vardhan, a partner and director at BCG in India. […]
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