>Venture Capital and Private Equity Investment in India

The face of global PE and VC is changing dramatically in the last few years. 2006 has witnessed the inception of funds infringing the threshold of $10bn – i.e. Blackstone’s $15bn buyout fund and the venture of KKR (Kohlberg Kravis and Roberts) on listed markets.

At the same time the amounts raised by these funds are growing to unimagined limits (about $300bn in June according to Bloomberg) giving great focus and tremendous attention to these kinds of alternative investments.

Following such developments and the ever mounting pressure of this flattening and globalizing world, there is an increasing need for funds to diversify internationally.

The factors stimulating the drive to go global can be summarized in the following:

Globalization
The need of funds to globalize is driven both by their requirement to mitigate their risk exposure by investing in different countries as well as to tap innovation, which is occurring around the globe.

Adding an increased international competition and the higher cost of building a company in mature markets, the quest for global cost-efficiencies will mark the rise of future PE and VC trends.

Funds increasingly need to look at India, China, Russia and Brazil to take advantage of the global outsourcing and off-shoring as well as to exploit these low-cost/high talent markets.

Interconnectedness
In a world of cross-pollination, cross-border and cross-sector influences the leading form of investment for global funds will be much like Multinational corporations through international collaboration. Global investors are forced to seek out local funds in emerging innovation hotbeds to help understand the chased market, addressing due diligence in the correct way and penetrate their large developing consumer markets.

Scale
As the VC and PE industries mature, experts are pointing to a growing divide between the performance of the top-tier players and that of their smaller players, and it goes without doubt that scale is a big contributor to over-performance.

A recent survey conducted by the Emerging Markets Private Equity association (EMPEA) states that 65% of interviewed managers declare a future increase in interest (compared to 45% in the same survey in 2004) to invest in emerging markets1. According to the National Venture Capital Association (NVCA), India is the second most attractive location, gathering the positive attention of 18% of the American fund managers.

Given these conditions, this research is meant to cover India as a possible investment target: starting from a portrayal of the current Private Equity situation in India; it shall cover the legal and tax angle of funds establishment, the macroeconomic situation and its likely impact in the short and long term.

Moreover it will contain a description of its most renowned investment targets: the information technology industry and the real estate sector.

Finally, it will benchmark the current performance analysis to China and Brazil and stress the advantages and disadvantages of India.Inc.

To see the full report: VENTURE CAPITAL AND PRIVATE EQUITY INVESTMENT