The Venture Intelligence Blog

Professor Aswath Damodaran of the Stern School of Business at New York University has an exhaustive web site on corporate finance related topics including valuation techniques. Interestingly, the web site has a detailed spreadsheet on Google's valuation. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an article on the trend of Indian SMEs preferring to list in exchanges at Dubai and Singapore rather than New York. Remember, not a single Indian company has listed its shares in the US after Tata Motors’ 2002 listing. This being the record of large companies, it is not hard to understand why smaller companies are looking elsewhere. Says Sanjay Hegde, executive director, PricewaterhouseCoopers: “The choice of exchange is primarily driven by the depth of the market, availability of funds and the regulatory requirements of the exchange. Indian companies have preferred Luxembourg mainly because of less stringent rules and also the time taken by the exchange for their review. The experience with Singapore is more or less like Luxembourg. Dubai is a new entrant, and is fast attracting attention.” In addition to speed, another reason why companies already listed in India are attracted to the overseas market is the premium that they receive on their shares. “A follow-on pub...

Businessworld has an article on how the current stock market correction could create trouble for companies which have raised funds through foreign currency convertible bonds (FCCBs) with a conversion price predicated on a rising market. FCCBs are bonds that give holders the option to convert them into equity at some future date, usually at a premium to the price of the company’s share at the time of the issue. IVRCL Infrastructures & Projects, for example, mopped up $65 million in December through an FCCB issue. Investors who have bought the bonds can convert them into equity at Rs 1,170 a share over the next five years, which was a 55 per cent premium on the quoted price that day (Rs 754.95). The drop in stock prices has hit companies like IVRCL very hard. Its share was trading at Rs 248 when this article was being written. The conversion premium has jumped to an astonishing 371 per cent. In other words, the IVRCL share will have to go up by more than 4.5 times over the next fiv...

Business Standard has a profile of ICICI Ventures' recent investments and new funds. Says Renuka Ramnath, managing director and CEO of ICICI Venture: "In the next two to three years we expect to raise another $2.5 billion in the realty space. Our expectation is to manage over $5 billion of real estate assets in the next five years." But that is not the only area Ramnath and her team are putting their hearts into. Buoyed by the success of its India Advantage Fund, which returned 30-35 per cent on a compounded rate annually, the company has just closed a deal to raise over $1 billion for its India Advantage Fund II, the largest India-focused fund in the private equity market, from which it will retain $850 million. At three times the size of the older fund, the new fund will focus on two key areas - management buyouts, and assisting Indian companies to acquire companies abroad, for which it will retain 50 per cent of the corpus. ICICI is also working on two new possibiliti...

Bloomberg columnist Mark Gilbert quotes Goldman Sachs's annual report to provide a glimpse into "the future of investment banking". The key messages are that investment banks need to take more risks, commit more capital to their business, and start investing in the deals they recommend to their clients. Why spend all those hours hunting for underleveraged balance sheets, mastering cunning tax wrinkles or crafting sale-and-leaseback deals just to give away all the gravy to corporate customers in return for a handful of fees? The Goldman imprint, though, is becoming ubiquitous in the M&A deals flooding the market this year. That suggests Chief Executive Officer Henry Paulson has been quicker off the mark than his competitors in putting Goldman's money where the firm's mouth previously was. So far this year, Goldman has had a thick finger in buyout pies, including a $3.8 billion bid for Associated British Ports Holdings Plc, a $9 billion offer for U.K. broadcast...

Businessweek has an article on IIT-Bombay's SINE incubator which helps students, professors, and alumni develop and commercialize their business ideas. Today there are 15 companies at SINE, all of them hoping to become new India's next big phenomenon. Today there are 15 companies at SINE, all of them hoping to become new India's next big phenomenon. Perhaps the most exciting is called Webaroo. The company offers a service that lets you search for and download Web pages -- with, say, tourist information about London, or the latest news from several different sites -- to your PC, cell phone, or handheld. Then you can quickly access the content without being online. "We need the best software engineers," says Rakesh Mathur, Webaroo's founder and an IIT-Bombay alumnus and veteran Silicon Valley entrepreneur. "Here, we have them." In spades. About 75 of Webaroo's 100 engineers are from the IITs, and all of them work in cramped quarters at SINE. SINE ...

KPMG has produced a report on India's energy sector and the related investment opportunities. The report profiles the Coal Sector, Oil Sector, Gas Sector, Nuclear Energy Hydro, Renewable Sources and Electricity distribution. A rapidly increasing population and growing urbanization has put immense pressure on energy and natural resources in India, as traditional sources of energy such as fossil fuel reserves are depleting. Alternatives to traditional fossil fuel use are vital to help the country avert an impending energy crisis. Via Altassets Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Research by Fortune magazine , found that the stocks of 26 Fortune 500 companies, where a founder still remains CEO - including Apple Computer, FedEx and Cardinal Health - "returned an average of 18.5 percent annually from year-end 1995 through 2005, which is 7% better than the Fortune 500's average return over the same period. Their profit growth has been superior, too, increasing at an average rate of 19.6 percent a year from 1995 to 2005, vs. 11.7 percent for the Fortune 500". (The Fortune list does not include Dell, Nike, Microsoft, and Starbucks, whose famous founders are now chairmen.) Fortune's findings were backed up by the research of an Ohio State University professor, Rudiger Fahlenbrach, who found that such companies beat the broader market by eight percentage points from 1993 to 2002. Fahlenbrach has a few theories on why founder-CEOs seem to be better corporate stewards. One is that they simply care more. Their companies are their life's work, so th...

Business Today has a good article titled "Biyani Vs Ambani" on the retailing plans of Pantaloon's Kishore Biyani, which has a head start, and Reliance's Anil Ambani, which is planning a rollout on a massive scale. Over seven days in January, Kishore Biyani, the 44-year-old maverick Chairman of the Pantaloon Group of companies, was closeted in meetings with Mukesh Ambani, Chairman of Reliance Industries...the agenda was how Pantaloon and Reliance could carve out their own huge spaces in the retail sector, avoid head-on competition, and thereby jointly take on the multinational retail giants once they get the green signal to set up shop in India...A week down the line, however, sources in the know reveal the dialogue broke down abruptly, and the proposed non-compete clauses never saw the light of day. THE SCALE OF THINGS TO COME PANTALOON RETAIL INVESTMENT PLANNED Rs 500 crore by 2006-07 SALES TURNOVER Rs 10,000 crore by 2010 RETAIL SPACE 10 million sq. ft by 2008 STOR...

Business Today has an article on MindTree Consulting, the VC-backed IT services company founded in 1999 by Wipro alumni, in the context of its revenues (for 2005-06) crossing $100 million ...it is one of the youngest Indian it companies to do so makes its feat even more impressive. The Big Three of Indian IT-TCS, Wipro and Infosys-had taken 29, 18 and 17 years, respectively, to reach this landmark... ...But TCS, Wipro and Infosys have revenues of about a couple of billion dollars (Rs 9,000 crore) and headcounts of 50,000-plus employees each. Can the relatively puny MindTree, with 3,200 employees, stand up to its bigger rivals? ...MindTree's net operating margins are believed to be significantly lower than those of the Big Three. The company, however, refuses to share these figures with BT, citing its status as a privately held one. "Yes, we are not in the high teens, but we are looking at increasing them," says Ashok Soota, Chairman and MD, MindTree. The industry average...

Business Today has an article trying on the reasons behind the delay in mobile telecom services firm Hutchison Essar's much anticipated IPO. Is all well between Hutchison and Essar? That's a question that has been doing the rounds for a couple of weeks now. If the buzz in Mumbai's investment banking circles is anything to go by, things are not hunky-dory between the two partners that make up Hutchison Essar, the mobile telephony joint venture (JV) that operates in 16 circles in India. Hutchison Telecommunication International Ltd (HTIL) directly holds a 42.34 per cent stake in the JV, and 19.5 per cent indirectly. The Ruias of the Essar group control 33.05 per cent, and could be in the hunt for 5.11 per cent more, currently held by the Hindujas. Even if Essar does move up to 38.2 per cent, Hutchison clearly calls the shots, being the largest shareholder on the basis of its direct holding; the indirect holding comfortably takes the Hong Kong telecom firm beyond 51 per cent,...

Knowledge@Wharton has a great interview with Michael J. Silverstein, author of the book, Treasure Hunt: Inside the Mind of the New Consumer . Here is what the book is focused on: In the U.S. and around the world, the consumer markets are bifurcating into two fast-growing pools of spending. At the high end, consumers are trading up, paying a premium for high-quality, emotionally rich, high-margin products and services. At the low end, consumers are relentlessly trading down, spending as little as possible to buy basic, low-cost goods and services. Between both piles lies a vast range of mediocre, medium-range products that Silverstein claims is doomed to decline. What implications does this have for companies and their brands? From the interview: We came to the conclusion that trading up and trading down were big opportunities for companies and for consumers. The amount of spending on trading down was approximately twice the amount of trading up. Both ends of the market offered huge op...

More Indians searched for "venture capital" (the words that is) on Google than another other country in the world, according to data from Google Trends . India was followed by - you guessed it - China. Interestingly, the world's largest VC market - the US - came in sevent in the top 10 list of regions "searching" for venture capital! 1. India 2. Hong Kong 3. Singapore 4. Ireland 5. South Africa 6. Israel 7. United States 8. United Kingdom 9. Canada 10. Australia Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

The US National Venture Capital Association (NVCA) and Dow Jones VentureOne has published “A Seat at the Table,” the first ever study of venture-backed company boards. The survey comprises answers from more than 700 VCs and CEOs to questions such as: * How many Board seats should a single venture capitalist hold? * How many hours do you spend on Board-related activities? * What are the top strategic concerns of your Board? * What is the most common cause of conflict between a CEO and the Board? Between VCs? * Is Sarbanes Oxley a concern to audit committees? From the press release : When it comes to the most common drivers of conflict between the board and CEO, the two groups diverged. Venture capitalists cited personality conflicts, exit strategies, and management changes as the top three issues while CEOs named valuation, burn rates, and exit strategies as being the most common causes for conflict. The most common reasons for changing leadership according to the...

Various international publications - including the UK's Telegraph and IHT - have articles on how Kohlberg Kravis Roberts's (KKR) recent listing of its unit is making other PE firms consider raising "permanent capital" for their funds from public investors. KKR's unit, KKR Private Equity Investors, raised $5-B (£2.7bn) on the Euronext exchange. From Telegraph: Blackstone and Carlyle are not the only funds examining the possibility of a flotation. Texas Pacific Group and the smaller Hg Capital and Close Brothers Private Equity are also considering the possibility of listing alternative asset vehicles. "After the size of the KKR flotation, all the big funds have the idea of a flotation on their radar," said a partner at one large private equity company. He added: "Although it is early days, we are all looking at KKR's performance from now on with interest." Although private equity houses are not yet lining up to float their entire operations...

Business Today has a profile of some of the fastest growing publicly listed companies in the country. The article includes a downloadable list of the companies. Not surprisingly, several of these companis have attracted PE financing in the recent past. SOME SMALL CAP COMPANIES IN THE LIST » Teledata Informatics » Crew BOS Products » Helios & Matheson » KRBL » Kei Industries » Lloyd Electric & Engineering » Surya Pharmaceuticals » Zenith Computers » Asian Electronics » Sonata Software Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Business Today has a cover story on Genpact, the former BPO subsidiary of GE. HEAD OFFICE: Gurgaon, India CEO: Pramod Bhasin REVENUE: $493 mn (Rs 2,218.5 crore) in 2005 EMPLOYEES: 20,000 OPERATIONS: Global delivery in 19 languages from 16 centres in six countries (US, Mexico, Romania, Hungary, India, China) VERTICALS: Finance & accounting, insurance, analytics, sales & marketing, financial services collection, supply chain and procurement, IT services, enterprise application services, programme management and customer services LONG-TERM TARGET: $10 billion (Rs 45,000 crore) in revenues by 2016 IMMEDIATE TARGET: $1 billion (Rs 4,500 crore) in revenues by 2008 Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an article on the "4-D" movie theatre at MCorpGlobal's Spice World mall in Noida. So, what in the world is this fourth dimension to watching a movie? What special features does a 4D movie have that set it apart from a 3D movie ? Sensory experience — that is the fourth dimension this theatre adds to the movie-watching experience. In 3D movies, things only seem to touch you. But in 4D films, sometimes they actually do. Weird as it sounds, this theatre packs enough tricks to surprise even the extremely blasé, at least the first time. Like 3D movies, here too, the camera’s view becomes your view. But in 4D films, you can also feel the lightning, rain, bumps, etc., shown in the course of the movie. For example, if there is a waterfall in a scene, you will feel the water spray on your face; or if the scene has a swarm of rats scurrying past people, you will actually feel their fur tickle your feet and ankles. Arun Natarajan is the Founder of Venture Intellige...

"Management buy-ins rather than buyouts are more viable in India. (In a buy-in, a private equity investor typically brings in a new set of managers. In a buyout, the investor backs the purchase of a company by the existing management.) Senior managers here still do not think of taking over their employer’s business," says Nainesh Jaisingh, head of StanChart Private Equity in India, has an interview to Businessworld . Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an article on the plans of Biocon, India's best known biotech company. In simple terms, Biocon’s game plan is this: look for interesting products to develop from all over the world. There would be companies that have discovered potential biotech drugs, but do not have the ability to develop them into full products. Biocon will develop them into drugs and jointly own the intellectual property. It will also manufacture the product for the Indian market and, if possible, for the entire world. Besides, it could have the marketing rights for India and some other regions. It is a unique business model for a biotech company at the moment. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an article on Reliance Industries' plans to build four cities modelled on the special economic zones in China. Mukesh Ambani is betting big. The investment in this project could well be more than the Rs 73,000-crore annual revenues of his flagship petrochemicals company, if one goes by the Rs 25,000-crore investment, both in the form of debt and equity, planned over a decade in just Navi and Maha Mumbai. On the ground, this would mean four new mini-cities or large satellite townships with world-class infrastructure, built close to airports and national highways. The attraction for buyers would be the relatively lower rates — it entails potential investment of less than half the real estate costs of central business districts and upscale residential areas of bustling Indian cities. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intell...

Forbes has a feature on Warburg Pincus with a focus on how it has been avoiding "club deals" (in which various leading PE firms band together to do buyouts). Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has a cover story on the boom in the mobile data services sector and its beneficiaries. The Opportunities As these three main protagonists — media, mobile and aggregators — get together, a Rs 2,300-crore market has been created, says a Lehman Brothers report. (This includes texting and is not just operator share.) Media companies are using mobile phones to interact with viewers, listeners or readers and, maybe, generate a little money. They could be using it to entertain them or promote a myriad products or services. This is where aggregators such as Activemedia Technology, Mobile2win or Hungama act as a link between media and mobile companies. ..Australia and India are the only countries in Asia that have collecting societies — the Indian Performing Rights Society (IPRS) and Phonographic Performance Limited (PPL). According to rates prescribed by PPL, anywhere between 25-40 per cent comes back to music firms. That has helped Indian mobile operators quickly hook on to mu...

Businessworld has an article examining the strengths and weaknesses of Indian animation - long touted as the "next big outsourcing story" - and concludes that the sector seems to have finally figured out a viable business model. India’s first full-length animation film, Hanuman, has made cash registers jingle, having raked in Rs 16 crore already from the box office and DVD sales. Predictably, new animation movie projects are being announced almost every week. Animation-driven children’s channels are realising that local content is the way to business success in India... ...A consensus is emerging in the industry on a workable business model: a mix of outsourced jobs, co-productions and own intellectual property creation with an animation school as a useful add-on. Says Jayakumar: “Outsourced jobs give you initial revenue and exposure; co-productions allow you to learn development of intellectual property and global marketing; and having your own library of shows is the only ...

Entrepreneur & CEO Matt Blumberg has list of characteristics that a great VC needs to exhibit. - Major pattern recognition -- "I've seen this movie before, and I know how it ends..."; - Deep understanding of the market and/or customer set to add strategic value; - Fundamental desire to be a product manager or marketing manager of your product, but also -- - Ability to stay out of the weeds with day-to-day details when the Board meeting ends; - Complete transparency about the motives of his/her fellow GPs and LPs and ability/appetite for follow-on financings (and needless to say, no/limited blocking of transactions that are clearly in the company's best interests but might run counter to his/her firm's own short-term interests) Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.