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PE funds robust despite market conditions

Venture capital and private equity firms, which typically invest for the longer term and bet on new ideas or consolidation, the current slump in the equity market is hardly a dampener, reports Indulal PM.

business Updated: Nov 06, 2008 21:52 IST
Indulal PM

Venture capital and private equity firms, which typically invest for the longer term and bet on new ideas or consolidation, the current slump in the equity market is hardly a dampener.

These companies have raised more than $3.0 billion (Rs. 14,000 crore) from both domestic and foreign investors to put into India. However, compared with a year ago, the amount raised seems to be slowing.

PE firms invested about $3 billion in July-September as against $4.2 billion in the year-ago quarter, according to industry tracking firm Venture Intelligence. The Kotak group, Subhkam ventures, TVS Shriram and Milestone are among the domestic institutions, while Nexus India Capital and leading US fund Sequoia Capital are among others.

“Our investments are backed by sound research and we operate under highest standards of prudence and governance. These are the qualities investors look for in times like these,” said Manu Punnose, CEO of nine-year-old Subhkam Ventures, which is raising Rs. 400 crore.

Chennai-based TVS Shriram’s India fund is raising Rs 500 crore. “Historically, private equity funds that started during market downturns have outperformed funds that invested in bull market years,” said Gopal Srinivasan, chairman and managing director, TVS Capital Funds Ltd.

The Kotak Group has raised $1.2 billion for infrastructure assets and another $440 million in other sectors.

Milestone Capital Advisors, started by former Pantaloon Retail chief operating officer Ved Prakash Arya is busy raising a new fund, Milestone Domestic Scheme–II, which will have a corpus of $250 million.