Despite hiccups caused by global factors, India will remain one of the most attractive destinations among all the emerging markets for private equity players, feels Ajay Relan, managing director, Citigroup Venture Capital International.
India would continue to receive $5-6 billion annually from private equity investors, Relan added. Citigroup Venture Capital alone is planning to invest around $1.4 billion in the next two years in India. “Citigroup has raised a little over $4 billion as emerging market funds. Of this, India is expected to get around $1.4 billion,” Relan said.
Other leading private equity players like Blackstone, Warburg Pincus, Carlyle, Texas Pacific Group and Kohlberg Kravis Roberts are already present in the country and are planning to invest billions of dollars.
Citigroup Venture Capital has acquired a 75 per cent stake in Sharekhan for $175 million. The deal expected to close in the next couple of days.
“In a volatile market like this we have started tweaking instruments to have better exit options,” Relan said. “Unlike the simple equity instrument, we are now looking for convertible instruments and other ways to protect our return on investment,” he said and added that volatile markets threw up more options for private equity players, which have a long term view,
The long-term appetite for Indian assets among global investors was strong as India was a long-term growth story, said Ashish Dhavan, senior managing director, ChrysCap, which raised $1.25 billion under its new fund, Crys V.
Citigroup Venture Capital, which started in 1996 with $25 million from proprietary funds, invested $100 million till 2000 and then $250 million by 2005. Between 2005 and 2006, the private equity firm invested $500 million in 35 companies. Some of the success stories are i-flex and Suzlon. In i-flex, Citigroup Venture Capital had invested $10 million and exited with $640 million. In Suzlon, it invested $22 million and cashed $400 million and is still sitting on equity $300 million.
Relan, however, added that Citigroup Venture Capital had missed India’s telecom boom. “It was a great investment opportunity,” he said. “Going forward, sectors like real estate, infrastructure, power, media and software will continue to give superior returns,” he said.