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Showing posts from March, 2008

Profile of Blackstone's Indian Ops

Businessworld has a cover story on Blackstone's Indian operations. For the Blackstone India team, closing a transaction is just the beginning. The pressure to show high returns starts building up soon after. The principals meet on Thursdays to discuss how to add value in portfolio companies. Like all private equity firms, Blackstone India is keen to cut costs, improve processes and connect its investee companies with new customers and markets so that it can significantly enhance profits to ensure successful exits. So, for a couple of days every week, Gupta’s handpicked team criss-crosses the country visiting manufacturing sites and key offices of investee companies to assist in changing the way these companies do business. By the end of the week, the team re-congregates at headquarters. “Every company’s needs are different,” says Gupta. “And we offer value that is tailor-made, whether it’s a buyout or a minority stake.” Gupta constantly talks about the value-add that Blackstone br

“Indian PE industry grew too fast over the last 3-4 years” - Interview with Ashish Dhawan, Senior Managing Director, ChrysCapital

Venture Intelligence recently spoke to Ashish Dhawan who, over the last two years, has been sounding a skeptical note on unsustainable valuation levels linked to the ever-inflating public markets. What does he feel about the current investing climate when the public markets have corrected significantly? Read on… Venture Intelligence: The recent correction in the capital markets justifies your caution on the levels it had attained. What’s your take now? Ashish Dhawan: The credit and housing crisis in the US – which is still the world’s biggest market - will not get fixed in a short period of time; it will take significant time for the system to absorb it and renew itself. I have never believed in the ‘decoupling’ effect - on a medium term basis. Sure, in the long term, India and China are in totally different growth trajectories compared to the US. But in the medium term, markets here go up because of capital inflows. And capital inflows, in turn, happen when people are in a risk-takin

"The PE Guys Have Lost Money! Ha! Ha! Ha!"

This morning, I saw yet another article on how PE firms, which have made investments in listed companies, are now sitting on significant paper losses. These days, such articles have a tendency to break out in one business publication after another (and sometimes even in the same one!) whenever there is a stock market correction. I'm puzzled by these types of articles and the motivations of folks who write them. After all, while no investor likes to make losses (on paper or otherwise), why should PE firms - which are required (by their investors) to make investments with a 2-5 year outlook - be bothered about 2-5 month returns? And, unlike mutual funds, no "small investor" in India is exposed to PE funds (so, there's no case for "public interest" that gets served by such articles). Maybe such articles get written because they can pass off for some brainy analysis and get played up on the front page? Whatever the reason, they have become EXTREMELY BORING. And,

Stanford Panel Discussion on Mobile VAS in India

ContentSutra has videos of an interesting panel discussion hosted by Stanford University titled "Indian Wireless Market—Why Mobile?, Why India?, Why Now?" . Speakers on the panel included Ashok Narasimhan of July Systems, Ojas Rege of Yahoo, Vinod Dham of NEA-IndoUS Ventures, Niren Shah of Norwest Venture Partners and Chetan Sharma of Chetan Sharma Consulting. 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 newsletters and reports.

Professional vs. User-generated content

At a time when user-generated content is threatening the viability of several "professionally" generated/edited media business models, Knowledge@Wharton has an interesting debate on this topic. Turow points out (that) navigating the morass of Internet content isn't easy. "Some things that look amateur are professional and vice versa. You never really know what's going on. And it's hard to track these things down without cross checking. The digital environment is putting an enormous responsibility on the consumer." Waldfogel acknowledges that consumers have to become better judges of content and accuracy, but says that not everyone will be a discerning reader. "Some consumers can tell what is amateur, but it's not easy. A lot of amateur content is cut and pasted from professional content." ...Ultimately, the tug of war between professional and user-generated content will be resolved by their business models. Traditional media companies -- t

Flurry of business media launches

Businessworld has an article on the heightened activity in the business media sector. Global titles, such as Fortune and Forbes, are clearly betting on their brand name and India’s growing economy to make a place for themselves. India, with its huge English-speaking audience, is one of a few countries where the news business is growing. That’s what lured The Wall Street Journal into partnering the Hindustan Times to launch the business daily Mint. A host of non-media organisations is also believed to be keen on entering media. For instance, the Jain International Trade Organisation (JITO), a group of rich Jains, has decided to launch a business monthly Jito World in English and Gujarati. The grapevine has it that there are many suitors for the deeply-in-debt Business India. One name doing the rounds is the Motilal Oswal group, which has been wooing Advani, who has thus far not given in. Recently, Advani, who holds a 51 per cent stake in Business India, has secured a few rounds of fund

Profile of the fashion retail-focused Murjani Group

Businessworld has a profile of the Murjani Group which is focused on high-end fashion retail. Mohan Murjani was legendary, not for starting a design house or his own label, but instead for using a series of innovative, often renegade marketing tactics to make the brands that he acquired famous. Some 30 years later, his son, 37-year-old Vijay Murjani is creating a high-end fashion retail chain in India. Vijay first moved shop to India in 2001 to check out the potential for luxury brands in the Indian retail sector. He quickly realised that none of the US or European fashion brands had been able to establish presence in India. Some of the most popular brands were limited to just one or two stores in Indian luxury hotels. Though the mall culture was beginning to evolve, none of the malls was creating space for fashion or luxury brands. Vijay began quietly snapping up India franchises for some of the world’s best known fashion brands, which he is now introducing to India for the first tim

“Cos. we invest in should be able to match or better the ‘Reliance Rate of Return’” - Interview with Harshal Shah, CEO of Reliance Technology Ventures

Venture Intelligence recently spoke with Harshal Shah, CEO of Reliance Technology Ventures Limited (RTVL) which has announced a series of investments in telecom technology companies like Sequans Communications, Stoke, E-Band Communications, etc. RTVL was launched in 2006 to incubate new business ideas and streamline the Reliance Anil Dhirubhai Ambani Group’s investments in emerging and high-growth technologies. Venture Intelligence: RTVL’s recent investments have been in the telecom space. Would this high focus on telecom continue? Harshal Shah: Not at all. It is just that Reliance Communications was the first out of the blocks in the Reliance ADA Group. As the group’s other areas of business – including Energy, Financial Services, Media & Entertainment, etc. - mature, we will make investments in areas synergistic to them. VI: Why has the focus been on companies outside India? HS: Technology is geographic agnostic. Since we can invest anywhere in the world, it really doesn’t matt

“Funds from corporate groups not a challenge to existing PE firms” – Interview with Brian Lim of CDC Group

Venture Intelligence recently spoke with Brian Lim, Portfolio Director (Pan-Asia) at CDC Group , on recent trends in the Indian Private Equity market. CDC, a UK government-owned fund-of-funds with net assets of $4 billion, is one of the oldest and most active investors in India via its exposure to funds like Actis, Aureos Capital, Avigo Capital, Baring PE India, BTS India PE, ICICI Venture, IDFC PE, India Value Fund and Lok Capital. Venture Intelligence: 2007 witnessed a slowdown in terms of new funds being closed. What do you expect for 2008? Brian Lim: 2006 had seen a lot of established fund managers successfully raising follow-on funds, while 2007 witnessed more first-time funds in the market. In 2008, we can expect to see managers who closed in 2006 to come back to the market and hence expect more funds being closed. VI: Are you concerned about Indian managers coming back too soon to raise new funds? BL: The 'fast investing pace' is true for most GPs in the market. To asses

VC Market

The following companies are seeking capital for starting-up / expanding their operations: 08-02-27-1: Bangalore-based technology firm building a SaaS platform for Indian Colleges and Universities to better manage campus placements and recruitments seeks <$1000K for scale up. The company also plans to build a central database which would generate leads for companies targeting college students 08-02-27-2: US-based IT Infrastructure Management professional services company focusing on Security Management, Storage Management, Network Management, SOA and Portals seeks Merger / Joint Venture. 08-03-05-1: Pune-based integrated dairy firm seeks >$5 M 08-03-05-2: Hyderabad-based IT Finishing School seeks <$100K 08-03-05-3: Start-up pharma firm seeks $2 M for setting up plant in a Special Economic Zone near Chennai. 08-03-12-1: Hyderabad-based 5-year-old Real Estate firm seeks >$5-M for Site Acquisition & Project Cost. For more information about any of these companies, investor

Remote assistant services

Business Today has an article on the remote "concierge" services provided by companies like Ask Sunday, Brickwork India and Get Friday. The services being offered by these concierges, or virtual valets, range from regular to bizarre. There are requests for quick information look up, getting music organised, online shopping, wake-up calls with the weather update and a reminder to exercise thrown in, to even getting work done on the company’s quarterly report, market research, documentation, compilation of information and in some cases even getting jobs for their clients. “We have organised parties and delivered food locally in the US through phone, we got a window pane fixed in Geneva and we can get a contractor to fix a broken plumbing line sitting right here in Bangalore,” elaborates Sunder. Get Friday’s client Valentin Yeo, 28, a self-employed SEO (Search Engine Optimisation) consultant in Munich, often needs support for his consulting business, updating and sorting his MP

Internet ad agencies are back!

Business Today profiles the second coming of Internet advertising agencies. Today, there are three clear categories in this space that are drawing the attention of entrepreneurs, investors, and established agencies. These are: mobile-related search and advertising, ad networks that aggregate advertisers and sites and play match-makers, and full-service agencies that do everything from search engine marketing to blog creation to online advertising. 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 newsletters and reports.

Profile of microfianance institution Bandhan

Business Today has a profile of West Bengal-based microfinance institution Bandhan. Bandhan today finances innumerable landless women, whose monthly income is less than Rs 2,500 (in rural areas) and Rs 3,500 (in urban areas). The first loan offered by Bandhan is between Rs 1,000 and Rs 5,000 for rural areas and between Rs 1,000 and Rs 7,000 for urban areas. On repayment, one is entitled to a subsequent loan, which is higher by Rs 1,000-3,000. But as Ghosh says, it’s perhaps time to look beyond traditional loan schemes. “Our experience suggests that there is a growing need among our members for higher loans so that they can expand their businesses,” he says. To set things right, Bandhan is using a new method now—the Micro Enterprise Programme, which offers loans of Rs 15,000-50,000 to those who have been its members for at least one year. There are two other riders, though: the loan should be invested in an existing micro enterprise (for expansion) and utilisation of the loan should ge

Business Standard names Sun Pharma's Shanghvi CEO of the Year

Business Standard's BS 2000 special issue has named Sun Phamra's Dilip Shanghvi as the CEO of the Year. The profile points how Sun has been among the few Indian pharma firms to have benefited from its overseas acquisitions. 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 newsletters and reports.

Telecom war rages on

Businessworld has a cover story on the unending corporate war in Indian mobile telecom. (Anil Sardana), the bespectacled, professorial general fighting Tatas’ telecom battle and Tatas’ regulatory advisors in New Delhi are being uncharacteristically aggressive for the group. Sardana is indignant about how his competitors have manipulated regulations in New Delhi, and publicly accuses many of them of hijacking India’s telecom policy. The man who has foxed Tatas, as well as a host of other telecom wannabes, including initially even the Ambanis, is Sunil Mittal. He, along with Vodafone Essar (earlier Hutch Essar, when it was owned by the Ruias), was an early entrant into the industry and took advantage of the government’s ignorance of the sector to secure an unassailable position for himself. Mittal’s game was simple and he’s still playing it. The mobile phone industry is dependent on the spectrum (or airwaves) that carry mobile phone signals at various frequencies. Mittal, along with Hut

Valuing MNC BPOs

Businessworld has an article on why it has been difficult for MNC banks to sell their captive Indian BPO units. The sale or the valuation for these captive units are not easy to realise. Citigroup has been trying to sell its BPO operations in India for almost a year now, but has not been successful so far. A captive can only be acquired by one of the Indian third-party BPO service vendors; foreign BPO companies are not interested in these operations. It’s a difficult sale not because of the valuation, but because of the complication involved. Captive operations are run as cost centres and there is no focus on profitability. Their objective is to provide certain back-office operations to the parent company in the US or Europe. The focus is on quality of service, and the service level agreements (SLA s) are high and demanding. When a third party vendor plans to take over these captives, the revenues and profits for each process have to be calculated. The SLAs and the liability on not a

Profile of Rural Innovations Network

Business Today has a profile of Rural Innovations Network (RIN), an NGO that helps rural innovators take their inventions to market. While Basil (Paul Basil, RIN's Founder & CEO)decided to target innovations and innovators, it was a journey from the scratch with the idea of keeping it simple. “We decided to focus on areas relating to water, agriculture, dairy and energy, while other areas were looked on case-for-case basis,” he says. RIN’s role was anything but simple in translating ideas to reality. “We had to first search for the innovators, identify those innovations which could work. Then we realised that we needed the resources to incubate them, before we help with patenting and technology transfers.” Also, the small and medium enterprises (SMEs) that undertake the manufacturing of the product themselves wanted help after the technology transfer for the initial sales push. “In such cases, we find venture capitalists that could partner the entrepreneur and sometimes ensure

"US slowdown to benefit Indian BPOs"

Businessworld had organized a roundtable discussion on the impact of the US slowdown on the Indian BPO industry. The panel members included Rahul Singh, MD and CEO of Citigroup Global Services; Raman Roy, chairman and MD of Quatrro BPO Solutions; Pavan Vaish, CEO of IBM Daksh Business Process; Salil Parekh, executive chairman of CapGemini India; and Neeraj Bhargava, CEO of WNS Holdings. Here is an excerpt from Neeraj Bhargava's remarks: First of all, I want to conclusively contrast the IT and BPO industry here because I have spent bulk of my time trying to answer questions which are more related to the IT industry than the BPO industry. We have annuity businesses. If people have budget cuts they actually seek us out even more and there is hardly any discretionary spending work we do. We are not dependant on CIO budgets for new spending so therefore in this… as it happened in the last downturn, when all IT companies who after years of denial that BPO is important to them, started l