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Showing posts from November, 2007

Countering hedge fund invasion

In an article appearing in AltAssets, James Kelly of US-based law firm Nixon Peabody LLP, talks about the increasing "hybrid" strategies adopted by hedge funds and how PE firms need to counter this. While the article is written based on the US context, parts of it are relevant for other rapidly maturing markets like India - where hedge funds like Galleon, DE Shaw, Passport, Quantum, etc. are becoming increasingly active in traditional PE turf - as well.
In our view, hybrid funds will likely begin to play a bigger role in the middle market. As money continues to pour into private equity funds and hedge funds alike, these funds find themselves in bidding wars as competition for deals rapidly increases. Further, as the markets have become more efficient and the role of transactional intermediaries has increased, proprietary deals are becoming rarer and auctions commonplace. Aside from the obvious intangible currencies of operating focus and expertise, timing, and track record, …

Will Dubai avoid the "skyscraper curse"?

Bloomberg columnist William Pesek has an interesting theory on the correlation between tallest-building projects and financial crises.
It happened in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 and in biblical times with the Tower of Babel. A bizarre coincidence perhaps, yet humankind's propensity for architectural overreach has been a reliable omen of meltdowns. Taiwan, which in 2004 became home to the tallest building, was arguably affected. Its economy didn't implode, so much as it's disappearing....

...The thing about record-breaking skyscrapers is that they can say as much about hubris as wealth, ambition and technology. Is Dubai a development miracle? Or is it the center of an Arabian asset bubble tied to surging oil prices?

At least for the moment, it would appear to be the former.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem i…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-11-21-1: Hyderabad based company seeks <$1 M in angel investment for their upcoming real estate portal.

07-11-21-2: Kolkata based Enterprise software company seeks <$1 M for marketing and promotion of ERP product targeted at Manufacturers, Exporters and Retailers.

07-11-21-3: Panchkula, HR based company providing agricultural financing and support services in the areas of land cultivation, marketing, IT applications, decision support systems, outsourcing services, capacity building etc. to farmers and lending institutions seeks <$5 M for expansion.

07-11-21-4: Bangalore based battery maker, with over 25 years of experience in the industry, seeks about $5 M to set up manufacturing of Lithium ion batteries used in electric vehicles scooters and cars.

07-11-21-5: Niligiris, TN-based floriculture and horticulture firm seeks $2.25 M for expansion and diversification.


For more information ab…

Why Ramzan is crucial for Carrom Board exports

Business Today has an off-beat article on the business of exporting carrom boards.
This unmatched frenzy at Meerut, a sports goods manufacturing hub of India, is triggered by the preparations for the Holy month of Ramzan in the Gulf countries. Sales of carrom boards in countries such as Saudi Arabia, UAE, Kuwait, and Bahrain increase by almost 50 per cent in the month of Ramzan, the fasting period that culminates in Id-Ul-Fitr, the biggest festival for Muslims. “During this period, the timing of the offices changes in the Gulf countries. People work from 9 in the evening till 4:30 in the morning and keep their shops closed during the daytime. Since playing cards is considered haram (profane), people prefer to play carrom that is considered a great leisure activity for the entire family,” says Anil Mahajan, Director, Himco International, an export unit based in Meerut.

Anil Mahajan is one of the 300-odd manufacturers of carrom boards, bulk of whose business happens two months preceding …

Business Today's Cool Companies listing

Business Today has published its latest annual listing of "hip and happening" companies. This year's list includes a VC firm - APIDC-Ventureast. Other cool companies include two Canaan Partners back companies Cellcast (Mobile VAS) and TechTribe (online business networking).
For a fund that goes by the name of Apidc Venture Capital, its seven partners are anything but old fashioned. One is a blues guitarist who’s done gigs at blues bars in Chicago; another is an amateur bartender who can knock up deadly margaritas and mojitos; the third has an abiding passion for interior decoration, the fourth is a meditation expert, the fifth is a long-distance runner, the sixth has co-founded an art gallery, and the seventh founded a ‘Heart of a Child Foundation’ with Sylvester Stallone as one of its patrons.

But guess what? That’s not the reason why APIDCVC—managed by Sarath Naru, Chandra Shekhar Reddy Kundur, Aditya Kapil, Ramesh Alur, Raghuveer Mendu, Venkatadri Bobba and Siddhartha…

Hollywood's growing fondness for Indian films

Business Today has an article on how Hollywood studios are now aggressively tapping into the regional language market in India.
Thus far, Hollywood studios have had only a peripheral presence in India, sticking to the traditional business of distributing their own—and sometimes, independently made films— in the country. Result: Hollywood’s share of the Indian film entertainment pie is a minuscule 3-4 per cent. But the big money lies in producing and distributing local films, and that is the path that some of the big boys of Hollywood are now taking.

...Hollywood first began testing the waters in the regional language market with dubbed versions of its English hits. The trend started with Jurassic Park in 1994. This was followed by Titanic in 1998. The success of these two films—the dubbed versions contributed as much as 25 to 40 per cent of their gross collections in India—highlighted the potential of the market. These were followed by Spiderman and Spiderman 2, Godzilla and Casino Ro…

"Indian ports require a sea change"

Businessworld has an article on private participation in Indian port development.
Ever since India struck its first privatisation deal in 1996 when Nhava Sheva International Container Terminal was awarded to global port operator P&O (since bought by Dubai Ports), Indian ports have attracted Rs 7,585 crore in private investment: an average of Rs 700-plus crore a year. That’s still a trickle compared to the Rs 7,000 crore per year required in the next five years, but it has helped. The average turnaround time for Indian ports has improved from 5.23 days in 1998-99 to 3.5 days now.

Then, efficiency has taken a hit, even in Jawaharlal Nehru Port Trust (JNPT), which handles more than half the containers being shipped to India, despite two of its terminals being privatised.

Ramnath Iyer, director at Delhi-based Crisil Risk and Infrastructure Solutions, says the average time a ship has to wait before docking on to a berth at JNPT, the most efficient port, is 10 hours. In Singapore, the wait…

Online bill payment firms make a comeback

With Clearstone Ventures and SIDBI Ventures investing into BillDesk and the Battery Ventures and Greylock combine backing TechProcess (the new avatar of ICICI Venture backed BillJunction), online bill aggregation companies have made a comeback on VC radar screens. Businessworld has an article on the trends in this space and business models of these firms.
“There are only two aggregators in India, and their business models are very different,” says Shalini Mehta, executive vice-president for retail liabilities and branch banking at Kotak Mahindra Bank. “The business for aggregators has grown only over the past two years. Last year, it was estimated that only 300,000 online payments were made. But this year, the number could go to 1.8 million.”

Mumbai’s BillDesk and Tech Process Solutions (TPS) are the two aggregators ploughing this lonely, potentially fertile furrow. Ever since broadband took off in India two years ago, both the companies are waiting for billers, such as utilities and mo…

Inputs to farmers via SMS

Businessworld has an article on a SMS-based service for farmers.
UK-based financial information and news provider Reuters Plc and Mumbai-based Multi Commodities Exchange of India (MCX), who are already empowering farmers by providing real-time agri-related information, believe food production could be revolutionised by integrating rather than sidelining middlemen. “The middleman is a key player and need not be wiped out,” says Anjani Sinha, director of MCX, which is setting up electronic mandis (wholesale markets) across the country to help farmers garner information. “He could help the farmer get produce to mandis that offer better prices.” For now, Reuters is helping farmers in Maharashtra do that through its SMS-based service, Reuters Market Light, which provides information on cropping patterns, mandi prices, weather updates and other agri-related information. In the process, it is indirectly helping sustain the middleman by ensuring that farmers go to those offering the most compe…

Apparel shopping as family entertainment

McKinsey Quarterly has an article comparing shopping for apparel across India, China and Brazil.
Indians devote roughly the same share of their income to apparel as do Chinese and Brazilians. But the country’s lower per capita income levels mean overall spending on apparel is significantly lower, and the habits of Indian shoppers present intriguing challenges for multinationals eyeing the market.1 For starters, nearly 40 percent of the mass-market Indian shoppers2 we surveyed said that their most important shopping occasions revolved around special events, such as weddings and annual religious festivals—a figure dramatically higher than the one for shoppers in the other emerging markets we studied. Furthermore, to a greater extent than elsewhere, shopping is a family activity in India: nearly 70 percent of its shoppers always go to stores with family, and 74 percent—more than twice the average of Brazil, China, and Russia—view shopping as the best way to spend time with family. The pre…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-11-07-1: Mumbai based online service for MBA aspirants and students seeks <$100,000 for expansion.

07-11-07-02: Hyderabad based HR Services firm specializing in offering recruiting, payroll and time & billing solutions seeks <$1 M for expansion across India and Middle East

07-11-07-3: Vijayawada based bio-fertilizer manufacturing company seeks <$5 M for adding new products and marketing.

07-11-07-4: Bangalore based Hotel and Resort chain, focusing on the mid market segment, seeks <$5 Million to ease leverage and acquire real estate for future expansion.

07-10-03-1: Mumbai based logistics services company seeks <$100,000 for expansion.

07-10-03-2: Kakinada based real estate developer seeks <$1 M for investment into real estate projects.

07-10-03-3: Mumbai based entrepreneur seeks <$100,000 to develop an interactive matrimonial website.

07-10-03-4: Ludhiana based auto com…

Why Battery is keen on media deals

Battery Ventures' Ramneek Gupta and Mark Sherman have published an article on the Indian media landscape and themes their firm would be keen to invest in.

TV and Print are the two largest sectors in Indian Media with $4.25B and $3B in revenues respectively. Additionally, TV is expected to grow at a CAGR of 26% over the next 5 years.TV accounted for ~43% of the total media market in 2005, a share that is expected to grow to 55% by 2010.

We will be looking to leverage this mindshare with opportunities along the following key themes in India:

1. Local Advertising and infrastructure – There are very few mass media avenues available for local advertisers in India today with the exception of Print. We believe there will be tremendous equity value creation in this space in the near-term.

2. Audience measurement systems – Infrastructure and Data services companies focused on audience measurement that allow the advertisers to measure the efficacy of their advertising campaigns is anothe…

Multiplexes: The New Game in Tinsel Town

Businessworld article on the business of Bollywood points out how multiplexes, while accounting for just 4% of the 13,000 screens in India, generate 30% of the box office collections.
It is the exhibition end that is emerging as Bollywood’s most modern arena. Multiplexes, expectedly, have led the charge. Over the last 5-6 years, aided by waivers offered on entertainment tax by various state governments, multiplexes have grown as part of the new mall culture. Today, multiplexes offer 450 screens at 130 locations with 140,000 seats per show. Of the 13,000 screens in the country, the multiplexes’ share is only 4 per cent. Yet, they have transformed film entertainment by generating nearly 25-30 per cent of the Rs 3,000 crore annual box office revenue. Furthermore, by offering a high quality viewing experience with comfortable seating, and a package of food, beverages and gaming, multiplexes are a whole new show in filmed entertainment.

The multiplex business is dominated by six corporate g…

Ajay Shah on Private Equity

Extract from economist Ajay Shah's column in the Business Standard argues for removing the tax and regulatory irritants for PE investments in India:
The investments in place today might generate 1,000 exits over the next four years. On average, the PE industry will produce one company per weekday! Some of these exits would be through an IPO; the others would involve sale to an existing listed company. In either event, this would give growth of the overall market capitalisation of India and grow the modern sector of the economy.

A key feature of PE funds is that they have a substantial shareholding in the investee company — sometimes even a majority stake. This is a sea change in the governance environment when compared with the usual Indian family run company, where the CEO has job security owing to owning over 50 per cent of the shares. PE funds, in contrast, exert substantial control, and sometimes even sack the CEO. This pressure helps to improve the performance of the company. O…

Deal Alert: IDFC PE invests Rs. 35 crores in water management co. Doshion

Edited extracts from the press release:

Water management company Doshion Limited has raised Rs. 350 million from IDFC Private Equity (via its IDFC PE Fund II). Doshion has a pan-India presence and has executed projects - in sectors like water purification, waste water and effluent treatment - in over forty countries across the world. The company was founded by its Chairman Dhirajlal Doshi in 1978 and is managed by his sons, headed by Ashit Doshi (Managing Director) and backed by a team of professionals.

The money raised from IDFC Private Equity will be used to fuel further growth, including acquiring niche companies in the areas of design and fabrication of water treatment plants and for bidding for upcoming BOT and BOOT projects in the water segment.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletter…