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Showing posts from September, 2010

"LPs concerned with style drift among Asian PE funds"

Interview with Vincent Warner, Managing Director and Chief Executive Officer, Chepstow Capital Vincent, a sponsor at the marcus evans Private Wealth Management APAC Summit 2010, on how mid-market companies are driving growth in Asia. (Extracted from our partner event Press Release)

What barriers are family offices in Asia facing at the moment?

Vincent Warner: There has been a significant change in the private equity landscape in Asia. Many groups which started as mid-market private equity firms have grown in size and are now concentrating on larger cap investments. Equally, many firms which established themselves, or opened offices in Asia with a buy-out strategy have eventually realised that Asia does not have as many buy-out opportunities as exist in the West; so their strategies have needed to shift towards significant minority and influence, instead of control investments.

Family offices and foundations are therefore facing difficulty in identifying groups with enough experience, a …

Vikram Akula vs Muhammad Yunus

SKS Microfinance founder Vikram Akula and Grameen Bank founder Muhammad Yunus present two very different viewpoints on how to scale microfinance at a fascinating recent panel at the Clinton Global Initiative conference.

The main difference between the two has less to do with whether microfinance should be for profit or not, but who the profits should accrue to. While Akula makes a convincing case why there is no conflict in maximising returns for shareholders and offering the best possible deal to borrowers, Yunus believes that, in the long run, the financial returns focused investors in SKS would force the company to move away from doing what's best for the poor.

You can view the full video of the session here

For more on this debate, check out the post on David Roodman's Microfinance Open Book Blog here

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View f…

Profile of weather forecasting firm SkyMet

Outlook Business has a profile of private weather forecasting company SkyMet.
Media outfits, such as Hindustan Times, Zee TV, Aaj Tak, The Hindu, Times Now and Mint (subscribe) to its services....“(Nokia) wanted a reliable weather forecast supplier for farmers,” recalls Singh. SkyMet was given the job of forecasting the weather for 3,000 tehsils across India. This meany redoing infrastructure and investing more to generate forecasts for each region. Soon, an even more engaging client was knocking at its doors. Thomson Reuters wanted forecasts right down to the village level for its Market Light service that provides localised information on the weather, market prices, commodity news and advisory tips on crops.

SkyMet, which operates on a subscription-driven model, has been growing steadily over the years. Today, it has 22 clients and its headcount has grown from three people at launch to 44 experts now. Turnover, which was a mere Rs 18 lakh in 2003, rose to Rs 2 crore in FY10. The enter…

Why an interest rate cap will kill microfinance

The proposal to cap interest rates charged by MFIs (at 24%) - via a finance ministry letter to PSU banks - has caused significant irritation to the industry and its investors. From an article in the Mint:
The smaller MFIs could go bankrupt, according to Sumir Chadha, managing director of Sequoia Capital India Advisors Pvt. Ltd—a private equity fund that supports microfinance lenders. “This reminds me of the price-control era, which ended more than 20 years ago,” he said.

...At least one in three MFIs in India are loss-making, and most of them are start-ups with a portfolio of under Rs.5 crore, shows a recent study by ACCESS Development Services, a not-for-profit organization that provides consulting services to MFIs.

...“The cost of operation in remote areas is high for all, and unless some concessions are given to smaller MFIs and those that operate in remote areas, the idea of financial inclusion through MFIs would be defeated,” said Mahajan

Vineet Rai of social VC firm Aavishkaar saw …

Microfinance: The Road Ahead

Vineet Rai of social VC firm Aavishkaar makes several interesting points as part of a Business Today roundtable on the sector.
One tipping point was in 2004-05 when the partnership model by ICICI Bank showed that scale can be achieved in microfinance. (ICICI Bank would forge an alliance with an MFI, which would identify, train and promote the clients and ICICI Bank would finance the clients directly.) This made the sector interesting — at least for the debt providers at that time. The second tipping point was Vikram Akula (of SKS Microfinance) standing up and saying I can raise capital and actually scale up.... Basically what he showed was that you can scale up rapidly and become fairly large.

...There are a few things you need to look at today. You need capital, which brings with it the issue of valuation and ownership and greed. We started with client acquisition as a model. Now the investor question is client stickiness, and differentiation has become the buzzword. Nobody wants to in…

Deal Alert: Nexus Ventures invests in cloud computing firm Arayaka Networks' $14-M first round

Edited excerpts from the press release:

Aryaka Networks, a provider of cloud-based application acceleration and WAN optimization solution, has raised $14 million in Series A funding from Trinity Ventures, Mohr Davidow Ventures, Nexus Venture Partners and Stanford University. Naren Gupta of Nexus Ventures has joined the company's board.

Founded in November 2008 by Ajit Gupta (President & CEO) and Ashwath Nagaraj (VP of Engineering), Aryaka Networks, Inc. delivers cloud-based application acceleration and WAN optimization with true business results. The company is headquartered in Milpitas, California with offices in Bangalore, India. Key advantages of the Aryaka solution include a secure, scalable and reliable application acceleration and WAN optimization platform as a service, rapid deployment, ease of integration, complete visibility and a significantly lower total cost of ownership.

Forbest India profile of Tech Support BPO iYogi

Forbes India has a profile of the VC-backed remote tech support company.

..a small but growing number of Americans like Smith are prepared to bypass US companies and directly hire tech-support in India. Smith (name changed) belongs to the baby-boomer generation that grew up without computers or mobile phones. Like many of that generation, she has the money to buy the latest gadgets but is not comfortable experimenting with them....

...iYogi also differs from outsourcing companies in some crucial ways. For one, you won’t find a technician adopting a fake accent while handling customer calls. “We were clear from day one on our goal to build a proud Indian company that offers tech support service with our true identity revealed upfront,” says Challu. “Using fake names and impersonating someone you are not… is a flawed business model.” Along the way, the company has evolved the mindset of a fast-moving consumer goods company.

...Now the moment a customer purchases a laptop from www.walmart.c…

Making Money in the Alternative Energy Market

Extract from our partner event Press Release):

The key to investing in the alternative energy market is getting in quickly, identifying where the best yields can come from and securing those sites fast, says Timothy Nelson, Head of Carbon and Sustainability Strategy at AGL Energy, in this interview. A speaker at the marcus evans APAC Alternative Investments Summit 2010 taking place in Singapore, 27 - 29 October, Nelson highlights the alternative energy investment opportunities, and why adopting a long-term view is essential for success.

How is the alternative energy market attractive to investors?

Timothy Nelson: Last year USD 250 billion was spent on power generation equipment globally, with more than half of that on alternative energy sources such as wind, hydro and solar. Growth rates in these industries are between 50 and 120 per cent annually.

Consumers and government policies around the world are shifting. Policies are being implemented to increase the proportion of renewable ene…

Deal Alert: Paracor India exits PL Shipping & Logistics via strategic sale

Paracor India Investments, Mauritius has sold its stake in PL Shipping & Logistics via a strategic sale to Switzerland-based M+R Spedag Group. Paracor had a controlling stake in PL Shipping which it acquired in February 2005. All minority shareholders (except management) have exited along with Paracor via the all cash deal.

Chennai-based law firm King & Partridge advised the sellers, while Mumbai-based law firm Nishith Desai Associates advised M+R Spedag.

M&A Then and Now: What's Changed

Extract from an article in Economic Times by RPG Group's Harsh Goenka.
Fast forward to the current era. We have learnt a lot over the decades and governed by our own experience , are now focusing more on the technology quotient, growth potential and management expertise of the target, rather than the traditional levers of cash-rich and synergy benefits. Yet, despite access to a far more efficient investment banking network and the numerous sources of information that are available today, it is still not easy to find the right company to acquire. The number of cases we end up rejecting at stage one are phenomenal! More often than not, we are left with only one or two suitable projects to pursue. And I find myself still relying on instinct to some degree and still doing my back-of-the-envelope estimations.

...There is a pattern that I sense emerging as far as Indian companies are concerned. M&As are likely to be limited to certain sectors in the next3-5 years as cheap and easy f…