Our Bureau

Mumbai, July 26

Standard Chartered Private Equity (SCPE), the global private equity arm of Standard Chartered Bank, feels there is still an element of froth on equity valuations despite the recent meltdown and that expectations in the market on valuations are not in the reasonable zone.

On the valuation side, China and South East Asia are more attractive, compared to India at the moment, Mr Nainesh Jaisingh, Head (India), Private Equity, Standard Chartered Bank, said here.

SCPE manages $750 million private equity fund for the region that includes China, Korea, South East Asia, in addition to India.

`Living on old hype'

"(In India) people are still living on the hype of what happened in the market last year," said Mr Jaisingh. The bull-run on the stock markets saw the bellwether Sensex almost doubling from 6,679 levels in January 1, 2005 to 12,000-levels in May 2006. "There is still some hangover left," he said, in reference to price demanded by companies on IPOs and the private equity transactions.

SCPE, Mr Jaisingh said, has invested $150 million in five companies in India. This includes i-flex Solutions ($10 million), Aurobindo Pharma ($20 million), Punj Lloyd ($50 million), ABG Shipyard ($32 million) and Sutherland Global Services ($30 million).

In comparison, SCPE has made about $160-170 million worth investments in China.

He said the private equity fund exited from i-flex when Oracle Corporation took over the Indian company.

Typically, SCPE's investments are for three to five years.

SCPE's investment for 4.5 per cent stake in Aurobindo Pharmaceuticals has appreciated by over 80 per cent.

Pvt equities no threat

Though the private equity segment is becoming more competitive with the entry of several players, SCPE does not see any threat to its business. "Companies can see the real tangible benefits that we bring in," he said, adding that SCPE helps out companies in general management of business, guidance on HR and investor relations.

Further, SCPE also brings in members on board of companies where it has made investments.

(This article was published in the Business Line print edition dated July 27, 2006)
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