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Evalueserve Releases Guide to Equity Investments in India
Investments could show a thousand-fold increase from 1996 to 2010
Research conducted by the global research and analytics firm, Evalueserve, shows that if current trends continue,
India will receive US $13.5 billion in Private Equity (PE) funding during 2007, ranking it among the top seven
countries in the world. And, forecasts show this funding could rise to almost $20 billion in 2010 – a thousand-fold
increase since the $20 million invested in 1996.
In its newly released report, “An Indispensable Guide to Equity Investment in India”, Evalueserve claims there are
over 366 investment related firms currently operating in India and another 69 have raised – or are in the process of
raising – funds and are planning to start their operations soon. In total, these PE firms seem to have amassed US
$48 billion earmarked for investment in India between July 2007 and December 2010. “Several firms that we talked
to also mentioned they would be willing to invest even more if they saw good investment opportunities,” said
Evalueserve Chairman, Dr. Alok Aggarwal. This stands in stark contrast to 1996, when Indian companies only
received a total of US $20 million. Indeed, if Indian companies do receive US $20 billion in funding during 2010, this
would represent a stunning thousand-fold increase over a period of just fourteen years.
However, beyond the tech-heavy activity that has driven much of the earlier investment opportunities, there are many
new areas that private equity and venture capital firms are now aggressively looking to invest in. These include
manufacturing, financial services, healthcare, real estate and construction. However, Evalueserve cautions that a
solid understanding of the unique Indian market and some behavioral adjustments will be required from investment
players who are new to India in order to maximize returns for their investors. In addition to the required capital,
proper research in a challenging market, subtle and savvy managerial skills, and a healthy dose of patience must
also be invested to ensure success.
Editor’s Notes
- PE Firms have already raised US $48 billion earmarked for India between July 2007 and December 2010.
- Three groups of rapidly growing sectors:
• Global Rapid Growth – IT, BPO, KPO, Drug Research and Clinical Research Outsourcing, Engineering
Services Outsourcing, etc,
• Indian Domestic Market – Retail, Travel and Hospitality, Healthcare, Entertainment, Education
• Manufacturing and Infrastructure – e.g., Automobiles, Automotive Components, Electrical and Electronic
Components, Speciality Chemicals, etc.
- Opportunities for PE’s Investing in India: Cherrypick companies who do well from BSE-100 and BSE-500
companies. Indian government will open the banking sector to competition and liberalize other sectors like
metals & mining, utilities & capital goods, attracting more PE, VC, and Hedge Funds. Investing in Indian Family
run businesses will require different management techniques and patience in the increasing M&A trend in India.
- Best Practices in PE Investments: Investors should be diversified in the listed above. Existing hi-tech
companies in India will contribute to only 10% of the overall growth of Indian economy. India should not be
compared to other countries like China & US to track trends in PE investments and growth. Success in India will
require a long term view.
About Evalueserve
Evalueserve provides custom research and analytics services to companies worldwide including Business Research, Market Research, Data & Financial Analytics, Investment Research, Intellectual Property Research, and access to a global network of domain experts through Evalueserve Circle of Experts. The firm was founded by IBM and McKinsey alumni, and has completed over 12,000 client engagements. The firm currently has over 2,100 professionals located in research centres in Chile, India, China and New York. Evalueserve’s “in-country” Client Executives are located in most major business and financial centres globally – from Silicon Valley to Sydney. For more details visit www.evalueserve.com .
Disclaimer
Although the information contained in this article has been obtained from sources believed to be reliable, the author and Evalueserve disclaim all warranties as to the accuracy, completeness or adequacy of such information. Evalueserve shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.
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