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Sindhu J. Bhattacharya

New Delhi , June 9

WITH the organised retail industry in India poised for exponential growth, several overseas private equity funds are eyeing the sector for investment opportunities.

A senior official at a US-based private equity fund said, "Retail is an interesting area and we continue to look for opportunities. We began by investing $90 million in one venture in 1997 and then took up another similar opportunity. Both investments were done by creating India-specific funds.

"However, we have had to overlook some very interesting opportunities in retail since this sector is closed to Foreign Direct Investment (FDI) and most of our investment comes as foreign money."

At present, overseas funds such as GW Capital, AIG, Warburg Pincus are investing across major retail ventures in India through dedicated India funds.

Retail consultancy KSA Technopak's Mr Arvind Singhal felt that further investment is expected through the overseas private equity route this year. "As per our estimates, modern retailing will attract Rs 3,000-4,000 crore investment in the next 12 months, with a majority through overseas private equity funds, provided the Government allows FDI in retail."

Take the case of discount chain Subhiksha. ICICI Ventures holds 26 per cent stake in it with Rs 50-crore investment. But for further requirement of Rs 75 crore for expansion, Managing Director Mr R Subramanian said, "the equity portion could be funded by other private equity investors or by an IPO".

He echoed Mr Singhal's views on overseas funds, "FDI in retail will give the sector a boost. A lot of Foreign Institutional Investors (FIIs) and private equity investors are seriously looking at Indian retail. Many private equity investors have made big money on retail in South East Asia and want to grab a slice of the pie."

However, Pantaloon Retail's Managing Director, Mr Kishore Biyani, denied he had any plans to raise funds from private equity players, saying, "We do not think private equity will increase with FDI in retail, maybe to some extent for domestic players."

The retail sector continues to be popular with investors, evident with the jump in scrip prices of listed entities. Pantaloon quoted a 52-week high of Rs 1,346 on May 27 against a 52-week low of Rs 300.10 in June 2004 on BSE. It opened today at Rs 1,280.50.

Tata Group's Trent Ltd touched a 52-week high at Rs 714 on March 11 against a 52-week low of Rs 243.25 in June 2004. It opened on BSE today at Rs 655.05.

Recently listed Shoppers' Stop opened 2.23 per cent up at Rs 395.10 on BSE today.

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