Munesh Khanna, formerly head of investment banking at Merrill Lynch & Co’s unit in India, raised $300 million to invest in companies that are distressed or need management help to revive their finances. Khanna, 44, runs his new private equity firm, Halcyon Group, with Narayan Seshadri, formerly head of Andersen Business Consulting in India, and Abhay Soi, who oversaw the financial restructuring group at Ernst & Young.
“We want to make investments where we feel there is some kind of active `high touch’ management participation,’’ Khanna, who is based in Mumbai, said in a telephone interview.
“This could be distressed assets or great companies which have lacked management bandwidth.’’ Among the world’s 15 largest economies, only China is expanding faster than India. As companies seek capital, new funds are sprouting and buyout firms, including Blackstone Group LP, are flocking to the South Asian nation.
Private-equity investors poured $7.2 billion into India last year, compared with $2 billion in 2005, according to the Asian Venture Capital Journal. The interest India has generated has made private-equity investing ‘very competitive,’ and the stock market’s rise has raised the cost of buying stakes in companies, Khanna said.
“Some assets are definitely overvalued,’’ he said. “You have to have the ability to walk away. Expectations of valuations are still high. That does need to be tempered.’’ India’s benchmark stock index has more than doubled over the last three years, reaching a record 14,652.09 on February 8. The index has fallen about 11% since its all-time high.
Source : Financial Express