The Venture Intelligence Blog

Forbes India has an article on the Blackstone Group's investments in India, especially its big bets on textiles firm Gokaldas Exports and BPO firm Intelenet. Blackstone investments in India have been battered by the economic and markets meltdown. Its cumulative investments of $730 million are now worth only 30 percent of the original value. Gokaldas has lost 71 percent of its value since Blackstone’s $165-million deal. Intelenet is unlisted but if WNS and Genpact’s valuation declines are anything to go by, the investment has lost two-thirds of its value. ...Of the seven investments Gupta has made, his fate would rest most firmly on what he achieves at Gokaldas and Intelenet. One, both have brought management control and that means Blackstone must ensure entrepreneurial energy keeps flowing through the companies. Two, taken together, both investments account for half the total money that Blackstone has invested. ...“In the first six months, investors in a PE fund are willing to lis...

Edited extracts from the Press Release: Global private equity firm The Carlyle Group has successfully closed its fourth Asian growth capital fund, Carlyle Asia Growth Partners IV (CAGP IV), a sector-agnostic growth capital fund which invests in China, India, Korea and other key Asian markets. The fund raised $1.04 billion in 14 months from a broad geographical range of investors. CAGP IV is more than 50% larger than its predecessor CAGP III by capital commitment and has already made its first investment in a leading Chinese high-end women’s fashion company. CAGP III has made 22 investments in 2.5 years, 80% of which were made in China or India. "The strong entrepreneurial culture in India has created many potential investment opportunities for Carlyle. India’s emerging middle class is fuelling strong domestic consumption, while the outsourcing and re-engineering of various products and services from all over the world to India continues to grow at a lively pace. India’s growth sto...

TheDeal.com has an interesting listing starting with the Warren Buffet-Goldman Sachs deal (winner) to Citigroup-Wachovia non-deal (loser, of course). Here are some selections from the Lehman Brothers bankruptcy-related listings: Winners: Nomura Japan's Nomura Holdings Inc. paid only $225 million for Lehman Brothers' Asia-Pacific operations a week after the investment bank declared bankruptcy. It would then go on to scoop up Lehman's European assets for $2 -- not per share, literally two bucks. Losers: Lehman's creditors, KfW Bankengruppe With $639 billion in assets and $613 billion in liabilities, Lehman dwarfed Enron to become the largest Chapter 11 filing in history. In the aftermath of the bank's fall, bidders have been able to buy the Wall Street bank's operations at flea market sale prices. KfW Bankengruppe was left looking foolish as it transferred €300 million ($426 million) to Lehman on the day that it filed for bankruptcy. The fallout included ridicule...

The USA! That's according to Tom Shapiro, Founder & President of global real estate investment firm, GoldenTree InSite Partners. Speaking at the Reuters Global Real Estate Summit, Shapiro said that while his firm had not made any investment in the US for two years, he was now seeing some of the best opportunities to make money on RE deals in the US (in the last 20 years) thanks to the attractive entry points. And that his firm was now more focused on deals in its home country. Could the re-emergence of the US on the radars of global investors like GoldenTree mean less money for the "original" emerging markets (aka BRICs)? 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 free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

Following the buyout of India's largest pharma firm Ranbaxy by Japan's Daiichi and RFCL's animal healthcare business by Pfizer, Businessworld has a cover story on how and why the big MNC pharma firms are now taking the Indian market more seriously. In recent months, two other large western pharma companies — UK’s GlaxoSmithKline (GSK) and France’s Sanofi-Aventis — have made news with their acquisition plans. Others such as US’s Merck & Co., are exploring differential drug pricing, and government partnerships to tap market potential. Still others — such as Novartis India, the local arm of the Swiss drug giant — are pushing into rural markets. ..a drier blockbuster pipeline has led MNCs to place a global thrust on generics. India is one of the few remaining generics markets driven by doctor prescriptions and not just trade-push. In the US, prices collapse when a drug loses patent protection. But in India, a market leader commands a sustainable ‘brand’ premium, without an...

In an article for the Economic Times, Arun Duggal, the former Indian CEO of Bank of America and a board member of several Indian financial services companies, has a set of drastic recommendations for disciplining global banks to ensure that they don't trigger another financial crisis of this magnitude. One, the size of the banks should be restricted, so that some of them do not become so big as to endanger the entire financial system. Their activities should be restricted too. They should not be allowed in the investment banking or securities business. ...Six, the whole system of creation and distribution of structured products needs overhaul. Banks should be asked to keep at least half of the assets created by them on their books so that the bank managements are well aware of the risks they are accumulating and distributing. Similarly the rating agency system needs major correction. Perhaps they should have their skin in the game and not only earn fees and then wash their hands o...

Extract from the profile of Kolkata-based branded menswear firm Turtle Limited: Turtle has just reported a turnover of Rs 62 crore, its highest ever, in 2008-09, up from Rs 46 crore the previous year. “We did better in the second-half…this year, we plan to grow by another 30 per cent,” he says, explaining why: “People will stop buying Louis Philippe and buy Turtle”. Turtle shirts end at Rs 900, way below its rivals. It has implemented Oracle e-biz to connect its 32 stores to its head office in grimy Howrah. “Our nature is not rampant growth,” says (Amit Ladsaria, Director), adding that Turtle stands for turtles: slow and steady…long life…tough exterior, soft interior… When it comes to shirts, Turtle is fussy: it creates its own fabric designs and gets the fabrics made to order. Today, it also makes suits, trousers and denims as well. Last year, it created a sub-brand, London Bridge, for shirts made of blends, leaving the pure cotton shirts for Turtle. Extract from the profile of Mumb...

In a recent Business Standard column , former Chief Economic Adviser Shankar Acharya has expressed unease - from the perspective of the economy - at the way the new UPA government has started off. Given the kind of expectation for reform the stock markets have built up from the new government, it might be well worth watching out for the signals that Acharya points to in the Union Budget. Economic reforms were not a serious campaign platform for the Congress or UPA...The crucial finance portfolio went to Pranab Mukherjee, undoubtedly the most experienced cabinet minister in the current firmament (he first held a cabinet portfolio thirty years ago), but not renowned for a stellar track record in economic reforms...Does this mean we will have another five years of near stasis on economic reforms? ...With exports falling and public investment sluggish, a failure to revive private investment would make it very difficult to attain the implicit growth requirements outlined above. My suggeste...

The new UPA government's first policy statement - the presidential address (PA) to Parliament - gives Business Standard columnist and former Chief Economic Adviser Shankar Acharya a feeling that this government is set to unleash a host of programmes (read big budget "yojanas" like the NREGS). The last five years of UPA rule witnessed an ambivalent mixture of trends. On the one hand, the government stopped privatisations and disinvestments, halted most reforms, strengthened price controls on petroleum products, fertilisers, food grains and selected interest rates and undertook major expansions of social programmes (notably the NREGP) and caste-based quotas in education and public employment. On the other hand, a potent combination of past reforms, successful fiscal consolidation (till spring 2008) and the liquidity-fuelled global boom propelled the biggest surge in private investment that India has ever seen, spurring economic growth to 9 per cent. Now things seem set to ...

Evolvence India Life Sciences Fund (EILSF) has committed to invest upto Rs. 25 Crore in Anjan Drugs Pvt. Ltd., a Chennai-based pharmaceuticals company specializing in medicines to treat Central Nervous System disorders. Anjan is one of the largest US-FDA approved producers of Divalproex Sodium and various other salts of Valproic Acid. Other companies that the $150 million EILSF has invested into include Hyderabad-based pharmaceuticals firm Gland Pharma and Bangalore-based oncology hospital firm HealthCare Global Enterprises.

Hyderabad-based green energy firm Shalivahana Green Energy Ltd. has raised Rs. 90 crore ($18 million) from Axis Private Equity and IL&FS Financial Services. Shalivahana is a renewable energy firm focused on biomass and small hydro power projects. While Axis PE has invested Rs. 54 crore ($11 million), IL&FS has invested Rs. 36 crore. The deal marks Axis PE’s fifth investment, taking its total investments to Rs. 374 crore. The firm's previous investments have been spread across sectors like water supply and sanitation, laying oil and gas pipelines, railway EPC and hospitality. “This investment further reaffirms Axis PE’s commitment to invest in infrastructure related companies in high growth segments such as renewable energy.” says Mr. Alok Gupta, MD & CEO, Axis PE. "Over 60% of India’s generation capacity is from thermal sources whereas renewable energy sources (excluding hydro projects above 25 MW) account for a mere 9%. As per Ministry of New and Renewable Energ...

Businessworld has an article on engineering & construction firm HCC's ambitious hill station project. HCC entered real estate development in 2001 when it kicked off land acquisition for the Lavasa project. Today, it has power projects in Kargil and Ladakh, and is also executing irrigation and water supply schemes from Godavari river in Andhra Pradesh to the Vaitarna lake, near Mumbai. But it is the Lavasa project that has taken centre-stage in the company’s business plans; and it is evident that HCC’s future is dependent on the fate of Lavasa Corporation. The commitment is humungous: HCC has acquired 10,000 acres, and aims to push up the resort town’s sprawl to around 13,000 acres spread over seven hills and involving the construction of 15 dams. Of the land acquired, it has mortgaged 7,694 acres to raise Rs 1,200 crore in debt so far. And now HCC is hoping to raise money through the QIP route while Lavasa Corporation itself is trying to interest new investor ...The looming ca...

Harvard University Prof and former IMF chief economist weighs in via his Businessworld column. US consumption, the single-biggest driver of global growth, is surely headed to a lower level, on the back of weak housing prices, rising unemployment and falling pension wealth. During the boom, US consumption rose to more than 70 per cent of GDP. In the wake of the crisis, it could fall down towards 60 per cent. ...Chinese growth is set to slow over the longer run as well. Even before the financial crisis, it was clear that China could not continue indefinitely on its growth trajectory of 10 per cent or more. Environmental and water problems were mounting. It was becoming increasingly clear that as China continued to grow faster than almost anyone else, the rest of the world’s import capacity could not keep up with China’s export machine. ...Even after the crisis, global growth is almost certain to remain lower than the pre-crisis boom years for some time to come. This change may be good f...

In his column for the Economic Times, Morgan Stanley's Ruchir Sharma explains why the structural issues relating to the "over-indebted US consumer and the export-dependent Chinese manufacturer" will come back to haunt the global economy in 2010, by which time the impact of the government spending plans will wear off. The path then for equities in the short-to medium-term is likely to be quite jagged. The current economic momentum inspired by government spending will likely keep financial markets well-bid for much of this year but the environment will be more challenging next year as the debt-impaired private sector’s contribution to economic growth continues to remain anaemic at best. Meanwhile, governments will not be in a position to provide any major fresh stimulus, given the poor state of their finances. ...Another risk to an economic upturn materialising in 2009 is a premature resurfacing of inflation . Some investors have been buying “hard assets” , or commodities,...

Knowledge@Wharton has an article on the phenomenon of Non-resident Keralites (NRKs) - basically, workers from Kerla who emigrate to work in the Middle East - returning back home due to the impact of the economic crisis. Some 200,000 to 500,000 Keralites working in the Gulf are likely to return home by midyear, state finance minister T.M. Thomas Isaac told the State Assembly recently. This is a considerable chunk of the estimated two million-plus Keralites working abroad, nearly 90% of them in the Gulf. The 2001 census put Kerala's population at 31.8 million. Non-resident Keralites (NRKs) send back close to US$8 billion in remittances annually, more than double the state's tax revenues. The impact of the reverse exodus -- both economically and socially -- could be devastating, according to experts. ...Adds Faisal Shamsudheen, a Dubai-based journalist-turned-PR manager who lost his job in the crisis: "Construction and banking are the worst hit. Mass redundancies are happeni...

Ok; we all know that India and China are still growing; while the economies of almost other countries are shrinking. But did you know that there are two more countries - Indonesia and Egypt - which are growing as well? Economy.com has an interesting chart showing visually what's happening to the GDP of different parts of the world. 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 free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

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As part of its recent cover story on telecom, Business Today has an article on companies which hope to tap into the Indian market for mobile handsets - but not necessarily compete with the Nokias and Samsungs. ...consider Intex Technologies, an Indian company which also sells laptops, monitors and other computing devices. Says Ramesh A. Vaswani, Vice Chairman, Intex: “We have no ambition to become either a Nokia or a Samsung. However, we certainly want to become the #1 Indian brand.” That’s not just talk: the company claims to be selling 60,000 handsets a month and hopes to double its sales in a year. And this from a company that started its handset business just two years ago. Playing in the Rs 2,000-7,000 range, the company focusses mainly on the Tier II and Tier III towns. Vaswani says the company’s brand has a recall and promises a “trouble-free product with good after-sales service.” In fact, the rise of the Indian brands, which collectively hold around 15-17 per cent of the mark...

Business Today has an article profiling top corporate executives who have turned entrepreneur in recent months. The list include former iflex Solutions CEO Deepak Ghaisas, who is now a biotech entrepreneur. Another venture profiled is a consulting firm founded by three former telecom CEOs which plans to handhold MNCs "through the Byzantine maze of regulation and intrigue". Enter Ravi Sharma and his two partners. “Our proposition is not capital, but management services that will not only help in reducing promoters’ capital but will also trim down the time to market,” says Sharma, 47, who has named his venture Phi. “Phi is a wonderful name, easy to pronounce and has two very powerful meanings: Wisdom of God and the Golden Ratio,” he adds. Sharma and Pramod Saxena, former Head of Motorola India, first discussed the idea of floating such a venture. Later, they roped in B.D. Khurana, former CEO, Reliance Communications. “Our new association is more like a meeting of minds at the...

Paul Kedrosky has a couple of interesting charts showing how the US credit crisis is good for the environment. The first chart shows that global electricity consumption is down - for the first time since World War II! The second one shows the change in energy consumption patterns across industries. 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 free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in