Interestingly, the Warbug deal in 2005 not only rocked the Indian streets by being the biggest stock trade, but also sent shivers to the boardrooms of global PE firms. SMC, a Private Equity firm reckons, “It (Warbug-Bharti) was a landmark deal suggesting the absorption depth of Indian corporate at the investment stage and hence, bringing India on the global radar of PE Funds.” In fact, in 2007, India raked in the highest amount of Private Equity, comprehensively outstripping China, which attracted only $8.3 billion PE investments during the same period. The future seems even more enticing.
Evalueserve forecasts show that by the year 2010, India will see a staggering $20 billion worth of PE receipts. “Our research
also shows there are more than 366 firms currently operating in India and another 69 are planning to start their operations soon. In total, they seem to have amassed $48 billion earmarked for investments in India during the next three and a half years, (July 2007 – December 2010),” says the latest Evalueserve report. As of today, ‘shooting northwards’ is how one can easily describe the gargantuan increase of PE investments in India. As discussed earlier, PE investments are not an alien phenomenon and have been quite prevalent in the country for more than three decades, even playing a significant role in the Silicon Valley story. It was in 1975 when Risk Capital Foundation become the first VC-PE to kickstart its operations in India. After that, many Indian institutions like Industrial Financial Corporation of India (IFCI), ICICI, among others, started mushrooming all over the place. There was no considerable action in the Indian VC-PE space until the end of the mid and late 90s. With the dot-com boom, the VC-PE phenomenon got a shot in the arm and in 2000, the value of deals skyrocketed to $1.16 billion. Then post the dot-com bubble bust, investments plummeted and reached a low of $470 million in 2003. But since 2004, there has been a secular rise in PE inflows.
The broad umbrella of Private Equity also encompasses some new deal variants that perhaps need mention. Consider the case of Bennett, Coleman & Co. Ltd., which has bought stakes in different companies in consideration for modest cash payment along with branding and advertising agreements with the investee company. These fall under Private Treaties. There are many big names like that of Dainik Jagran, HT Media, Dainik Bhaskar and Network 18, which are known to be associated with Private Treaties (by already having or planning to spin off new departments for the same).
Evalueserve forecasts show that by the year 2010, India will see a staggering $20 billion worth of PE receipts. “Our research
also shows there are more than 366 firms currently operating in India and another 69 are planning to start their operations soon. In total, they seem to have amassed $48 billion earmarked for investments in India during the next three and a half years, (July 2007 – December 2010),” says the latest Evalueserve report. As of today, ‘shooting northwards’ is how one can easily describe the gargantuan increase of PE investments in India. As discussed earlier, PE investments are not an alien phenomenon and have been quite prevalent in the country for more than three decades, even playing a significant role in the Silicon Valley story. It was in 1975 when Risk Capital Foundation become the first VC-PE to kickstart its operations in India. After that, many Indian institutions like Industrial Financial Corporation of India (IFCI), ICICI, among others, started mushrooming all over the place. There was no considerable action in the Indian VC-PE space until the end of the mid and late 90s. With the dot-com boom, the VC-PE phenomenon got a shot in the arm and in 2000, the value of deals skyrocketed to $1.16 billion. Then post the dot-com bubble bust, investments plummeted and reached a low of $470 million in 2003. But since 2004, there has been a secular rise in PE inflows.The broad umbrella of Private Equity also encompasses some new deal variants that perhaps need mention. Consider the case of Bennett, Coleman & Co. Ltd., which has bought stakes in different companies in consideration for modest cash payment along with branding and advertising agreements with the investee company. These fall under Private Treaties. There are many big names like that of Dainik Jagran, HT Media, Dainik Bhaskar and Network 18, which are known to be associated with Private Treaties (by already having or planning to spin off new departments for the same).
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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