The Venture Intelligence Blog

As a reader of this blog, you would be aware that Venture Intelligence has been (since 2002) a leading provider of information and analysis on Private Equity and M&A deals in India. Our research and analysis is used extensively by PE/VC investors, deal industry practitioners and the media. We also provide a bouquet of services to entrepreneurs. We are now looking to hire experienced (2+ years) Sales & Marketing managers for our existing and new products. In case you are interested in applying, drop us a short note about yourself ( by email to arun@ventureintelligence.in . Please note that, if interested in your profile, we will revert with a short written assignment that you need to complete before we will consider your resume. Thanks!

Morgan Stanley's Ruchir Sharma was recently given the cover of Newsweek to explain in detail why commodity prices can only head down in the long term. Yet the fact is that the world has faced all these issues before, and for the past 200 years, commodity prices have been trending downwards, thanks to new technologies, greater efficiency in extraction and the substitution of one commodity for another (which explains the high correlation between commodities prices). Bank Credit Analyst, a research firm based in Montreal, has data showing major industrial commodity prices are 75 percent below where they were in the year 1800, after adjusting for inflation. Despite all the worries over "peak oil," the fact is that the major bear markets in oil have been demand, rather than supply led. And when demand eventually picks up, there's usually some new alternative (nuclear energy, natural gas, green technologies) waiting to pick up some of the slack. The real price of oil today...

"Super LP" Chris Douvos has some "crowd sourced" suggestions for GPs on how to organize better annual LP meets. * Sometimes it's hard to get a really good sense for company progress, especially during the staccato sprint through 30 company slides in 15 minutes. Sure, the EBBS (Earnings Before, ahem, Bad Stuff) margin at one firm is up 23 basis points from last year, but how is that company doing? Sometimes the torrent of numbers crowds out the analysis and handwriting atrophy that arises from all the typing we do prevents us from scribbling notes as fast as we once did. A couple of folks suggested using a consistent green/yellow/red rating system for portfolio company assessment. The slides could even break out the ratings along critical dimensions: strategic positioning, team development, execution, progress to exit, etc. * I love fund CFOs and I appreciate that they should get some airtime, but there are some who do little more than recap the data from t...

From the Reuters report on Goldman Sachs Asset Management's (GSAM) move to use credit market movements - instead of ratings from agencies like S&P and Moody's - to assess the credit risk of corporate bonds: GSAM's approach is to segment credit spreads into five groups, to assess how issuers are trading in relation to their peers, (GSM global co-head of fixed income and currency Andrew Wilson) told Reuters in an interview. "So the widest 20 percent are the most risky, regardless of the rating," he said. "That has helped us identify risky names and react in a timely fashion, as the market is a much better guide. Credit spreads widen immediately on bad news, whereas it might take a while for the ratings agencies to reflect that." ... Wilson said that relying on names which are rated 'triple B' and above - the traditional way of framing investment grade mandates - had not been that helpful. "Ratings agencies are good at static analysis but ...

Now that the stock markets have received the positive surprise from the elections with such a strong thumbs up, the focus shifts to whether the new government delivers on the heightened expectations. Writing in the Business Standard, Akash Prakash of Amansa Capital points out what - if not delivered upon - could end up disappointing the stock markets. What can go wrong? Obviously, the new government can fail to act and continue dithering on policy action. If we see no action and just continued setting up of committees and groups of ministers, then that would be extremely unfortunate and set us up for huge disappointment. Sign posts that investors will be using to calibrate the heightened expectations begin with the new cabinet....The next important milestone will be the budget itself. What is the game plan to tackle fiscal issues, better targeting of subsidies, infrastructure funding, the GST, etc? Independent of the government being indecisive and frittering away the mandate, the on...

Diagnostic Services, Medical Devices, Hospital Chains and Wellness Products to attract the most investments, a survey of PE & VC investors by research firm Venture Intelligence reveals. Private Equity and Venture Capital investors, who have invested over $2 billion into Healthcare & Life Sciences (HLS) companies in India over the last five years, are keen to step up the pace of investments in this industry. Over 42% of PE & VC investors surveyed by Venture Intelligence, a leading research firm focused on Private Equity and M&A deal activity, felt there was a strong opportunity to tap the market for healthcare services in semi-urban and rural areas. The investors also identified Diagnostic Services, Medical Devices / Equipment, Hospital Chains and Wellness Products and Services as their favorite sectors for investments within the HLS industry. The detailed results of the poll will feature in the Venture Intelligence “Private Equity Pulse on Healthcare & Life Science...

The 2009 election results, which have largely crushed the pipedreams of the left parties and other blackmail-focused riff-raffs at the national level, has delighted stock market investors which is evident from CNBC-TV18's two part video interview with Rakesh Jhunjhunwala of Rare Enterprises, Manish Chokani of Enam and Samir Arora of Helios. Jhunjhunwala : Let us look at the positives one from the market point of view, one from the long-term point of view. I think the biggest positive is Indian democracy is now maturing. I heard MJ Akbar say on TV channel that people are voting for governance -Muslims are not voting for Muslims, Hindus are not voting for Hindus, people are voting for governance. Where you get good governance you are getting votes. ... Arora: I think this seriously is a big thing for India to imagine to not see Mr. Karat (General Secretary of the CPI-M) on TV that itself is worth 500 points...But in general this change in outlook will be bigger. Chokhani: If I am a...

At a time when giant busieness groups are struggling with their global acquisitions, Business Today has a cover story on a group of 10 mid-sized firms who have successfully pulled of several outbound deals. Now cut to a company like the over Rs 3,500-crore agrochemicals firm United Phosphorus Ltd (UPL). It hasn’t made any billion-dollar deals, but the 26 acquisitions (including products) it has pulled off since 1994—a decade in which going global was considered extreme rather than the norm— would easily cross that number. UPL is unlikely to figure in consultants’ case studies of bigbang acquisitions. But consider what UPL has achieved: A global footprint that covers 23 countries (which in turn allows it to address customers in 86 countries), a broad range of operations that includes agrochemicals, seeds and biotechnology and significant entry barriers in countries that it has entered. And yes, most of its buyouts are working well. Reason? UPL doesn’t wait for more than three years for...

Businessworld has an article on the impact of the slowdown on media industry. On television, the advertising volume in November last year fell sharply to 45.31 million seconds compared to the previous month’s 55.37 million seconds — a fall of 18 per cent in a single month. The print industry’s pain was worse. From a high of 20.99 million column centimetres of advertising in October last, ads fell 45 per cent to just 11.59 centimetres in November. Radio advertising, too, declined by 30 per cent from 9,176 seconds in October to 6,515 seconds in November. The actual fall in ad revenue would be far larger considering that advertising rates have crashed between 15 and 30 per cent across all mediums. From November onwards, too, television advertising has continued to decline marginally. On the other hand, both print and radio ad volumes have been inching up. The April-May Lok Sabha elections are, however, expected to arrest the downward trend. “We expect an infusion of Rs 800 crore – Rs 500...

Rajesh Shukla of NCAER has an article in the Economic Times with the latest statistics tracking the Great Indian Middle Class. Accordingly, the group that was classified as middle class (households with annual incomes of Rs 2 to Rs 10 lakh at 2001-02 prices) in 1995-96 was just 25 million-strong, has grown to 126 million in 2007-08 and further 153 million by end the decade. Our estimates show that in 2001-02, middle class households were around 6% of all Indian population and expected to grow to 13% in 2009-10, an annual growth rate of nearly 13%. More importantly, while the middle class forms just 11.4% in 2007-08 of the total Indian households its share of total income is nearly one-fourth and saves more than 55% of its income. The growing clout of the middle class becomes even more apparent when one looks at the ownership patterns of household goods. Nearly 49% of all cars are owned by the middle class, compared to just 7% by the rich. Similarly, 53% of all airconditioners are owne...

Sanjoy Sanyal has an interesting post analysing the market for multimedia content for schools in the context of a new entrant: the Manipal Group. The key proposition is simple enough: use technology to deliver top quality standardized learning at low cost independent of the physical location of the student. It is a thought that has been at the core of technology-aided learning. There is considerable interest in this market. Educomp with its Smart class, Everonn with its ViTELs, NIIT with its Interactive Classroom and IL&FS Educational & Technology Services are direct competitors. Smart class accounted for 60% of Educomp’s Rs. 145 cr (USD 29 mil.) revenue in the quarter ended Dec 09 (source: website). How scalable is this business? Consider the following facts. India has about a 1 million schools out of which 75,000 are private schools. The private schools are further classified into: • Approx. 30,000 Government aided schools with an average monthly fee of Rs. 450 (USD 9). • Ap...