The Hindu Business Line : VC funds, PE firms continue to scout for infrastructure cos

Hyderabad, Nov. 14 Venture capital funds and private equity players continue to scout for investments in the Indian infrastructure sector but await Government initiatives to speed up investments, according to venture capital industry players.

While there is continued interest from US and European investments funds in wide-ranging areas within infrastructure including airports, ports, roads and power projects, they want the Government, which is the main investor, to make first move.

However, they warn that the overall investment during 2008 will come down compared to last year.

While the exit options have come down due to market situation, the size of the deals and number of transactions will be lesser as investors are in a consolidation and wait and watch mode, according to Mr Sudhir Sethi, Founder and Chairman and Managing Director of IDG Ventures India.

The Partner at India Value Fund, Mr George Thomas, said when the stock markets are at a two-year low and the western markets are in turmoil, fund raising has become tough.

However, there continues to be a keenness in making investments in India.

Speaking at VC Circle Forum hosted by India Value Fund, the Managing Director of ICICI Ventures, Mr Shailesh Pathak, said, “of the $500 billion investments projected during the plan period, a significant amount will come from the Government. While concerns of slowdown are real, it will not be long before there is turnaround of this trend.”

Referring to infrastructure firms, Mr Pathak said in Hyderabad alone there are more than 20 infrastructure companies with revenues of over Rs 1,000 crore and more than 200 companies with revenues of Rs 200 crore.

This only shows the robustness of the market and potential for investments.

The Chief Operating Officer of BNP Paribas India, Mr Praveen Chakravarty, said “the financial crisis is not over yet. While the fundamentals in India continue to be sound, the public market has dried up. Therefore, new investment flows will be determined based on real business opportunities.”

Most VCs agreed that there are more traders and fewer entrepreneurs in India.

Representatives of ICICI Ventures and Kotak Private Equity today hinted at closing separate infrastructure funds to address the domestic infrastructure market seen to have immense potential despite current slowdown concerns.

Mr Pathak said, “our investments of $247 million in infrastructure firms yielded excellent results and we believe that there is scope to tap into infrastructure sector with more investments. Therefore, we are in the process of closing a large fund for infrastructure sector.”

“Our investments in companies like NCC bear testimony to returns we have had,” he said.

The Director and Partner of Kotak Private Equity, Mr K.V. Ramakrishna, said, “Kotak is in the process of raising a large infrastructure fund and expects to close it early next year. This will be throughinternational market and in India too.”

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