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Chennai, Jan. 5

HI-TECH companies founded by Indians in the US raised over $216 million in venture capital/private equity financing during the quarter ended December 2004.

Of the 23 companies that raised financing during the quarter, at least seven companies closed rounds of $10 million or more, according to data from TSJ Media, which tracks venture capital and merger and acquisition activity involving Indian-founded companies worldwide.

"The investments in Indian-founded companies in the US during the latest quarter were lower than that during the same period last year when 32 such companies had raised over $267 million," said Mr Arun Natarajan, Editor, TSJ Media.

"The amount invested in the latest quarter is also lower compared to the July-September 2004 quarter during which 31 companies had raised $376 million," he said in a press release.

Asked to comment on the trend, Mr K.P. Balaraj, Managing Director, WestBridge Capital Partners, a venture capital firm, said, "To my knowledge, VCs in the US are increasingly looking at companies that have an India-based business plan and managements that have Indians on board. Our people in the US and also market information confirm this trend."

According to release issued by TSJ Media, the largest single investment during the latest quarter was the $52 million fifth round raised by Infinera Corporation, co-founded by Mr Jagdeep Singh. The company provides optical networking technology.

The second-largest investment was the $16 million second round raised by Othera Pharmaceuticals Inc, which was co-founded by Dr Ghanshyam Patil.

Two companies, TuVox and Intelligroup, shared the third slot. TuVox, co-founded by Mr Ashok Khosla and which provides natural-language speech recognition systems for call centre applications, closed a $15 million fourth round led by new investor Norwest Venture Partners.

Intelligroup Inc, co-founded by Mr Nagarjun Valluripalli, Mr Rajkumar Koneru and Mr Ashok Pandey, raised $15 million from Softbank Asia Infrastructure Fund and Venture Tech Assets Pvt Ltd. The two investors now own approximately 50.3 per cent of the Nasdaq-listed Intelligroup's outstanding common stock, the release said.

The Dr Partha Bhattacharya-co-founded Protego Networks Inc, provider of security monitoring and threat management appliances, agreed to be acquired by Cisco Systems Inc for about $65 million in cash.

The Mr Murli Thirumale-founded Net6 Inc, provider of secure access gateway and Internet Protocol telephony products, was acquired by Nasdaq-listed Citrix Inc for about $50 million in cash, the release said.

(This article was published in the Business Line print edition dated January 6, 2005)
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