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Wednesday, November 07, 2007

A coming of age for private equity

I wrote an article in Business Standard today about what private equity funds are doing in India.


  1. I dont really know the number but my hunch is that a large share of the PE investments would be by way of PIPES - Private Equity in Public Enterprises; and/or investing pre-ipo through a preferential allotment.

    i personally believe these preferential allotments short changes the minority investors. I understand it is faster, cheaper - but still favour the good old rights issue.

    - Arvind Chari
    Quantum Asset Management

  2. My BS article (link in the blog entry)has rough estimates for investments by PE funds in listed companies.

    I seem to remember some PE funds have had to do open offers. They should be subject to SEBI rules on equal treatment to minority shareholders - or is there a catch? What am I missing?

  3. Bharti-Warburg Pincus combination is the best one so far, with the latter making over a billion dollar in profit after investing less than a fifth of that amount in Bharti at a time when the company was in real need of cash and was mostly making losses. Similar kind of PE-backed investments were seen in companies like Shringar Cinema, HT Media, NDTV, and Suzlon Energy. In most of these case, however, P/E funds probably did not play an active role in influencing the company's day-to-day affairs.

    However, the more recent cases seem to suggest that this is changing:
    Autoline (Duke),
    Phoenix Lamps (Actis),
    Gokaldas Exports (Blackstone), etc.

  4. but if we look at the present indian scenario, where inflation is attributable to the shortage of food supply, are we really going to be salvaged by monetary tightening? or in otherwords are you trying to say that monetary tightening will not help much in the event of cost push inflation?


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