Private-equity investments in India are likely to fall this year due to a lack of investment opportunities, said Nikhil Raghavan, a principal at private-equity firm Bain Capital LLC in Mumbai.
“There are few companies looking for capital because India is slowing down and (they are questioning) why put up the next factory?” Mr. Raghavan told The Wall Street Journal recently. Mr. Raghavan expects private-equity funds to allocate $5 billion to $7 billion into Indian companies this year. This compares with investments of $9 billion made by private-equity and venture funds in 2012, according to research firm Venture Intelligence in Chennai. Mr. Raghavan is one of a 15-member team at Bain’s office in Mumbai that makes investments in India and Southeast Asia. Since the India office was launched in 2008, Bain has e invested $1.3 billion in Indian companies, drawing from an Asia fund and a global fund. Bain’s India investments include Himadri Chemicals & Industries<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=500184.BY>Ltd. 500184.BY +5.89%<http://blogs.wsj.com/public/quotes/main.html?type=djn&symbol=500184.BY?mod=inlineTicker>, a Kolkata-based chemical maker; Hero Investments, which owns two-wheeler maker Hero MotoCorp<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=500182.BY>Ltd. 500182.BY -2.58%<http://blogs.wsj.com/public/quotes/main.html?type=djn&symbol=500182.BY?mod=inlineTicker>; Lilliput Kidswear Ltd. and a $1 billion- investment in 2012 in outsourcing firm Genpact. Bain sold its Lilliput stake to the company’s founder in 2012, but remains invested in the other Indian companies. Edited excerpts from the conversation with Mr. Raghavan: *The rupee has lost more than a third of its value against the U.S. dollar in the past five years. How does that affect private-equity investing in India?* >From 2002 to 2008, India was a real interesting place. Foreign investors of all kinds were coming to India and they were generating returns. Since 2008, by and large they’ve made no money at all. In dollar terms, almost every investor is down 30% to 40%. India has not delivered good returns for foreign investors in six years. When you couple that with an India that is slowing down, (where) corporate governance is…turning out to be not as strong as it was perceived to be…you almost have to ask the question, why should foreign capital come to India? *India has taken some steps recently, such as deregulation of fuel prices and a series of investor meetings by the finance minister. Do they help?* **Investors are not looking for one big-bang reform or two big-bang reforms. They are looking for a steady pace of reforms. Changing rules dents confidence and makes people believe that arbitrary things can, and will, happen. The rules need to be transparent, consistent, and not arbitrary, not changing. If the rules were transparent enough, the capital is there to come in. But when you have a tough global macro-economic situation, we have to try extra hard to attract it and convince people to come. *Are investors willing to wait for returns?* There is only so much that you can wait. I think a lot of foreign (investors) want India to do well. But at the end of the day they are also custodians of other people’s wealth, and so the facts have to match up to the promise. For previous investments, the average (investment horizon) has stretched over five years. But if you have to underwrite more than five years, then (private-equity firms) will allocate fewer dollars because you have liquidity pressures yourself. You can’t tie up your investors’ capital indefinitely. *Do you expect to see a drop in private-equity investments this year?* It looks like it will be lower than last year. In the case of private equity, it is just the lack of opportunities. There is more than enough capital to invest in India. It is (about) finding interesting investments that can deliver the returns that are expected. There are few companies looking for capital because India is slowing down, and (they are questioning) why put up the next factory? I think private-equity investment in India this year will almost certainly be down. The number will be $5 billion to $7 billion. *Has it become tough to raise funds for private equity in India?* Fundraising is globally tough, though India has fallen off quite a bit because of a simple reason. Because investors are saying: I have put billions of dollars in India and not only is it not marked up, it’s stuck. I can’t keep allocating money indefinitely to India; I need to see some return. *What is Bain Capital’s investment strategy in India?* Globally we tend to invest in five sectors — consumer, health care, industrials, technology and media telecom. Also financials, where we have not been active historically. We are looking for talented entrepreneurs and management teams that we can partner with to build great global businesses. We will never take an operational role. We don’t have any fixed allocation for India -- -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. 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