Private equity radar catching Indian companies

BANGALORE, INDIA: In an attempt to bridge the gap between investors and technology companies, Yen Expo is organizing the Bangalore Technology Equity Fair (BTEF) 2008 on June 27.

Arun Chandrachud, CEO, Yen Expo a subsidiary of YEN Management Consultants Pvt. Ltd, a boutique investment bank based in Mumbai, shares his views on the Expo in a chat with Deepa Damodaran, CIOL. Excerpts from the interview:

CIOL: How important is the Bangalore Technology Equity Fair (BTEF) 2008 in the present scenario when India is witnessing an economic boom?

Arun Chandrachud: Yes, the Indian economy is witnessing a boom and attracting huge investments. The last couple of years have seen exponential growth in the investment scenario in India, specifically for startups and growing businesses. On the market front, we have about 14-16 billion dollars of investment this fiscal year. India is on the focus and several companies are eyeing the Indian market.

All of these trends are paving the way for newer vistas to Indian SMBs, which are witnessing a rocketing growth, on a larger perspective. However, due to lack of knowledge about the private equity market, the complex processes and limited access, many companies find it difficult to reach out to a critical mass of investors. We are providing a B2B platform for investors and investment-ready companies to come together and make the right kind of deal.

CIOL: What was the impact of the Mumbai Fair in February 2008?

AC: The IPEF 2008 (India Private Equity Fair) in Mumbai was the first of its kind in India. It received a tremendous response from the industrial aspect. Twenty-three companies and over a hundred PE funds came together, which is in itself a huge achievement. Already seven-eight companies have succeeded in gaining investors and many more are in the process. Regarding the impact, it will take a little more while to know.

CIOL: To what extent has the market scenario changed after the Mumbai fair?

AC: Today, the market scenario has gained a much more positive approach toward equity funds. Expectations have risen. Companies are in a lookout for equity funds, whether it is private or public. Private equity is critical for a company’s growth.

For a newly emerging company, there are newer means to gain PE funds. However, for the already established ones, we have opened up a platform to gain PE funds. Now, promoters and companies have reasonable expectations.

CIOL: Will the US slowdown have any impact on the PE market?

AC: The US slowdown won’t have much impact on the Indian PE market because the venture capitalists are investing the capital that they have secured even before the slowdown. Whereas, on the other hand, the slowdown in the US economy will in turn push more investors toward India.

CIOL: How do you evaluate the PE market trend in India compared to that of the West?

AC: PE is all about investing in high growth companies. In the US, it is all about consolidating financial layout, or, in other words, it is a restructuring game. In the US, there are only a few companies, which showcase a high growth trend, whereas in India, the economic boom is itself speaking the growth rate.

CIOL: How many companies, PE funds and venture capitalists do you expect for BTEF 2008?

AC: The Mumbai Expo was looking at companies from all verticals. However, Bangalore fair will be much more focused. This time we are looking at companies from the technology sector. This would be a smaller event compared to IPEF 2008, in Mumbai. We are expecting about 10-15 companies and around 40-50 PE funds for this venture. We are expecting these figures to rise, as more companies will come forth to take up the opportunity.

CIOL: How much worth of deals will the SMBs clinch this time?

AC: We are expecting deals worth of $5-20 million in BTEF 2008. That is, altogether around $50-300 million of investment, overall.