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Friday, Sep 22, 2006

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Few investment options at home, Valley VCs eye India

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Private equity flows cross $ 2 billion mark in the first half of this year

Hyderabad , Sept. 21

The private equity market has attracted investment of over $ 2 billion in the first half this year, almost doubling the 2005 figures. The fund flow has been fluctuating from $ 1200 million in 2001 to a low of $ 850 million in 2003.

This faster equity inflow now is great news but coincides with an interesting development in the Silicon Valley where investments have slowed down. Many funds are chasing the same set of entrepreneurs. These valley venture capitalists are training their attention on India. In fact, the excitement is such that a Bangalore-based company seeking funds has called for tenders.

`Good going'

"While the going is good now, one must also be prepared for downturns. Citing the stock market experience of some investors during 2000-2001," Mr Srini Raju, promoter of i-Labs warned.

iLabs, a $ 350 million fund, covering a portfolio of 13 companies, recently turned institutional from being a privately held fund.

Often companies come up with disruptive technologies and MVNO is one such that has potential to change the telecom market. The Mobile Virtual Network Operators are changing the face of telecom markets globally. They have not managed to enter India due to regulatory issues.

Speaking at The Indus Entrepreneurs-ISB Connect today, Mr Raju said his experience with promoting companies has been exciting. Of the fifteen, he is engaged with, 13 have been successful and two of them have been disposed off. The portfolio includes, Xius, Megasoft, MetLife, Sify, TV9, DQ Entertainment and eSolutions.

`Huge opportunities'

"Earlier, the complaint was there were not enough opportunities in India but this is now being seen as an exploding segment. The FII investment has touched $10 billion and the capital market is worth $ 700 billion, which has doubled within the last 24 months. However, we need to be prepared for downturns," he said.

"Like Japan a decade ago, India will throw up many real estate billionaires. And these people can help boost the economy further", he said.

Other speakers including from and, mentioned about the potential Internet companies hold provided they are innovative. Start-ups showcased their business plans, seeking to attract VCs to invest in them.

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