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June 26, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:
07-06-27-1: Delhi-based NBFC with a networth of over Rs.280 million seeks $1-5 M for expanding its micro-finance lending business.

07-06-27-2: Mumbai-based fitout contracting company seeks >$5-M

07-06-27-3: Delhi-based manufacturer of carburetors and fuel management components, with supplier relationship with Maruti, Suzuki and Birla Yamaha, seeks >$5 M for tapping export opportunities.

07-06-27-4: Mumbai-based just-in-time manpower provider seeks $1-5 M.

07-05-27-5: Howrah-based company involved in provider of Sports Infrastructure for Corporates and Educational Institutions seeks <$100,000.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

June 21, 2007

Interview with Subhiksha Retail's CEO

Economic Times has an interview with Subhiksha Retail’s managing director, R Subramanian.
Today, we deal across four categories — mobile phones, fruit and vegetable, FMCG & groceries and medicines.

...The consumer is going to come to us because our prices are cheaper. In order to provide the best prices to our consumers, we have to set up a large number of stores. Cheapest price is our positioning plank and that’s how we are different from other players. Look at FMCG, for instance. In this space, 95% consumers do repetitive buying. So it makes sense to target these household essentials in our discounting scheme. On the other hand, mobile phones are not repeat purchases. So costlier the phones, better the deals at Subhiksha.

...Our mobile shops will be in the malls. Otherwise, we’re pretty much following the stand-alone format because malls are not ubiquitous, and stand-alone stores pretty much echo our value-for-money positioning.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 20, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:
07-06-20-1: Gurgaon-based anti-piracy software firm seeks $1-5 M.

07-06-20-2: US-based Online Service for Discount Shopping in India-based online and offline stores seeks <$100,000. 07-06-20-3: Punjab-based company seeks >$5-M to set up Packaging and Marketing facilities to Food Processing Enterprises in Northern Bihar.

07-06-20-4: Delhi-based chain of multi-speciality dental clinics seeks $1-5 M for expansion.

07-05-20-5: Pune-based entrepreneur seeks <$100,000 for an online marketplace for editorial content that will serve as a mechanism for online content providers to capture advertising spend.
For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

June 18, 2007

Video interview with Sequoia’s Sumir Chadha

The TieCon 2007 web site has an
video interview
with Sumir Chadha of Sequoia Capital India.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Podcast Interview with Adventity CEO

Kamla Bhatt has a podcast interview with Kumar Subramanian, Founder & CEO of finanance-focused KPO firm Adventity which has raised $20 million in funding from Norwest VP.

In the interview, Kumar speaks about how they met with over 25 PE/VC investors in the US and received eight term sheets before deciding to go with Norwest.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 17, 2007

TutorVista shows the way for positive PR on offshoring

Online tutoring service TutorVista has recently been featured in two US TV news shows - PBS Nightly business report and NBC's Today Show - which feature positive reviews of the "remote tutoring out of India" phenomenon.

The parts I liked best were the segments in the NBC show which show a black parent and a school official explain that their alternative to using a tutor from India is not to hire one at all. The local tutors are simply way too expensive for them.

Such good PR, that showcase actual end customers in the US saying positive things about the services they receive out of India, can go a long way in creating a buffer against local vested interests fanning anti-outsourcing "backlashes".

UPDATE: Now, The Economist has a profile of TutorVista Founder & CEO K.Ganesh as the person "keep an eye on..if you want to see where Indian outsourcing is going".

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 16, 2007

When Blackstone goes private again

Even before the famed US buyout firm actually pulls off its IPO, breakingviews' Edward Chancellor has an imaginary 2012 letter by Blackstone's CEO offering to buyout its public shareholders!
By early 2007, it was clear that the rapid growth of private equity was inciting a wave of public opposition in both the US and Europe. That is why our industry established the Private Equity Council in Washington to explain our case. At the time, I personally expended much time and effort educating the media on this subject.

I wish our efforts had been more successful. Since 2007 two tax changes have hurt our industry's profitability. Several countries in Europe, including Germany, have followed Denmark's lead in removing the tax deductibility of interest payments for leveraged buyouts. Although the US did not follow, the Internal Revenue Service has succeeded in forcing a change in the tax treatment of private equity's performance fees (known as the "carried interest"). Previously, the carried interest was taxed at the capital gains tax rate of 15%. After this tax loophole was closed, these fees have been taxed at corporate rate. This change wiped nearly 20% off our 2008 earnings.

The buyout backlash worsened after the recession, which was accompanied by bankruptcies at several high profile LBOs. During the Senate hearings into the private equity industry, the dismal performance of many buyout funds, especially the 2006 and 2007 vintages, came under scrutiny. The fees charged by private equity firms were also widely criticized in the light of losses experienced by many pension funds. It is scarcely an exaggeration to say that private equity has become the scapegoat for all our economic woes. The upshot was that public pension plans have been forbidden by federal law from making any further buyout investments. This has been a serious blow. Up to that date, public pensions accounted for around 40% of Blackstone's investor base.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 13, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:
07-06-13-1: UP-based Food & Beverage products manufacturer – which supplies to ITC as well as exports fresh fruits and vegetables- seeks >$5-M for expanding capacity.

07-06-13-2: Bangalore-based Power Quality Audit & Solution provider to a wide range of industries seeks strategic investment - including via M&A/JV route - of $1-5 M.

07-06-13-3: Bangalore-based IT company with Patented Solutions for Mobile Marketing – based on SMS - seeks <1-M

07-06-13-4: Bangalore-based Retail Software firm - with product line covering solutions for hospitals, blood banks, pathology labs, asset management solutions and customized enterprise applications - seeks <$1-M.

07-05-13-5: Mumbai-based company seeks $1-5 M for its one stop online shop for loyalty points exchange.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

Network with Top IT Services & BPO Entrepreneurs, Investors @ IB Connect - July 12, Bangalore

IT Services and BPO companies have traditionally been a favorite among investors in India. However, with the rapid maturing and consolidation in these sectors, start-ups and mid-tier firms alike are facing significant challenges. In this context, leading investors and top executives from IT Services and BPO companies will come together at Venture Intelligence IT Services & BPO Connect to network, discuss and share best practices.

Speakers at IB Connect include:
Sashi Reddi, AppLabs

Deepak Kamra and Alok Mittal, Canaan Partners

Sunil Wadhwani, iGate Corporation

Ravi Pandit, KPIT Cummins

Pradip Kar, Microland

N.Krishnakumar, MindTree

Venkatesh Roddam, Nipuna Services

Siraj Dhanani, PharmARC

Rajiv Mody, Sasken

Chandu Nair, Scope eKnowledge

K. Ganesh, TutorVista.com

Hiren Kulkarni, Zensar

Raman Roy, Quatrro*

Dr. Anand Deshpande, Persistent Systems*

Rohit Kapoor, EXL Service*

* To be confirmed


The panels at IB Connect feature discussions between entrepreneurs, operating executives and investors on the following issues:

• How are these sectors going to shape in the next few years?
• Is focus on verticals and niches the way to go for SMEs?
• How can investors differentiate the winners from the crowd?
• What are the challenges for investors in these sectors?

The conference will also provide significant time and structured opportunities for speakers and participants to meet and interact with each other.

Click Here to view more information about this event and register online.

June 11, 2007

The Future of Capital?

Businessworld has a cover story on Future Capital - the financial services arm of the Kishore Biyani-promoted Future Group (formerly Pantaloon Group) - with a special focus on how it plans to provide loans to encourage consumers to buy more stuff from the group's retail stores.




I was especially interested in the parts that addressed the risks associated with Future Capital's investing in projects and companies that are closely linked to the group's fortunes.
In effect, Sain (Sameer Sain, CEO of Future Capital) and Biyani are building a web of intertwined companies. The Horizon International Fund is building several gigantic malls called Market Cities — many of which will be occupied by Pantaloon’s stores. The Hotel Fund will build a chain of four-star hotels — many of which will be set up in Pantaloon’s malls. Private equity fund Indivision has mostly invested in consumer product companies — many of which supply to Pantaloon’s stores.

...It is important that the two challenge and hold off each other. Sain will demand the best price from Biyani when Horizon International Fund leases realty to Pantaloon stores. Otherwise the interests of the fund’s investors would be compromised. Biyani will drive a hard bargain when Capital Foods (one of the companies that Indivision has invested in; it makes chinese sauces and processed food) asks for more shelf space in Big Bazaar. Otherwise, the interest of the Pantaloon shareholder and, more importantly, the Pantaloon customer would be compromised.

“The day the Future Capital blueprint was drawn up, I sold all my shares in Pantaloon Retail (worth about Rs 1 crore),” says Sain. The day the real estate funds were set up, it was decided that the fund management team would move out of Pantaloon Retail’s headquarters in Mumbai into a different office. It was also decided that no executive would hold dual responsibilities in Pantaloon and in the fund.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

The healthcare opportunity

Business Today has a detailed article on the Indian healthcare scene.
The market potential, to put it mildly, is mind-boggling. There are just 1.1 beds for every 1,000 Indians, compared to 4.3 in other Asian countries such as China, Korea and Thailand. As India's population ages and more people get afflicted with lifestyle-related diseases (such as heart and nervous problems, and diabetes), the demand for quality healthcare will explode.

...According to the FICCI-E&Y study, a middle-level manager with a family of four spent an average of Rs 1,935 on healthcare in the late 80s. At last count (2001-02), such a family spent between Rs 7,650 and Rs 11,475 on medical care.

...Until recently, corporate hospitals were also hamstrung by a lack of finance. But now global investors, in the form of private equity investors, are willing to put money behind them. George Soros' Quantum and Blue Ridge funds, for example, have invested in Fortis Healthcare, a chain set up by the promoters of Ranbaxy. Manipal Health Systems received $20 million (Rs 88 crore) from IDFC Private Equity Fund (see Private Equity and Healthcare), and Warburg Pincus picked up 23 per cent stake in Max Healthcare. "The entry of Warburg two years ago was a sign of confidence in the Max Healthcare model," says Mukesh Shivdasani, Max's Executive Director (Operations). The growth apart, what interests PE investors in healthcare is the fact that it is an industry with no down cycle-there are no years when people don't fall sick. "Hospitals will grow as long as they earn the trust of their patients," says Shivdasani

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 09, 2007

Video interview with Mayfield’s Navin Chaddha

The TieCon 2007 web site has an video interview with Navin Chaddha of Mayfield.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Day in the Life of a VC

Dan Primack of PE Hub has posted an email (source unknown) describing the "hectic" day in the life of an US-based biotech VC.
5:45am - Alarm clock. Pick up Blackberry from nightstand, fire off an email to portfolio company CEO to demonstrate “round-the-clock” vigilance. Go back to sleep.

8:30am - Wake up. Decide whether to have breakfast in the kitchen, dining room, sunroom, veranda, or gazebo. Have “breakfast meeting” with Rex and Fido.

9:45am - Drop child off at nursery school. Banter with child’s teacher. Haha, that teacher doesn’t make in a year what I spent in Lanai over New Year’s. Wow. I haven’t been to Hawaii in three months. Call assistant, re: biotech conferences in Hawaii.

10:30am - Arrive at office, remark loudly that these breakfast meetings are killing you. It’s been ‘go, go, go’ all year. The pace is killing you. Makes you wish it was 2002 again.

10:45am - Call CEO of biotech portfolio company. Ask if he’s considered building a services component to add to his business.

Well, you the idea...

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Podcast with Luis Miranda of IDFC PE

Kamla Bhatt has an podcast interview with Luis Miranda, CEO of IDFC Private Equity.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Video of Vinod Khosla on the Ethanol Economy

Google has put up the video of an hour-long presentation by Vinod Kholsa on his (now) favorite topic - Ethanol - delivered at the company's campus. (Larry Page does a short intro before Kholsa's presentation.)

Hat tip: VentureBeat

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

June 06, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-06-06-1: Faridabad-based manufacturer of Healthcare Consumables seeks <$1-M in growth capital.

07-06-06-2: Secunderabad-based firm seeks <$1-M to expand SMS-based service that keeps parents updated with regular information about their child at school.

07-06-06-3: Bangalore-based placement consulting firm seeks <$1-M

07-06-06-4: Gurgaon-based IT Services firm offering web-based and mobility solutions seeks <$100,000.

07-05-30-5: Delhi-based auto components company that has developed world's first teeth Interlocked IVT (Infinitely Variable Transmission) seeks >$5-M to further research and manufacturing for the export market.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

June 04, 2007

Taking Indian food to the world

Businessworld has a short article about Indian restaurant chains planning to expand their overseas footprints and cater to a clientele beyond the NRIs.
The growing appetite for Indian “curry” will certainly attract entrepreneurs, says Rajesh Mishra, president, Federation of Hotel and Restaurant Association of India, in Delhi. “Some Nepali food chain selling Indian food in the US earns about $50,000 per month per restaurant,” he says. “This is a huge market. Clearly, the numbers are driving these chains.”

Indeed, new players, such as Mumbai-based restaurateur Sanjeev Kapoor, who opened 17 Khana Khazhana restaurants in New York, are growing. And there is room for more, as “increased competition will only help growth”, says P.R. Shiva Kumar, a partner with Saravana Bhavan, a Chennai-based food chain with 18 overseas eateries.

...But the complexity and costs of carrying out such moves are well worth it. “The business is highly profitable,” says Shiva Kumar, whose company has 27 restaurants in India, but gets 40 per cent of its profits from its 18 overseas restaurants.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

"Real Estate Investment Tourists"

As part of its cover story on Real Estate scene in India - titled "Reality Check" - Businessworld featured a forthright column by Chetan Dave, CEO & MD of SUN-Apollo Real Estate, which recently closed a $630 million Indian Real Estate Fund and has made significant investments in the Shriram Group's ambitious project in Chennai.
India had a minuscule amount of ‘institutional quality’ in existing real estate, and FDI was only permitted in development projects (except hotels). The result: all the FDI went to developers with FDI-compliant projects on the drawing board. Public markets also got into the act in 2006. Sensing the availability of capital, some large and sophisticated developers went directly to loosely regulated markets such as London’s Alternative Investment Market (AIM) and raised capital.

The Indian real estate story was heard around the globe. The money raised transformed the Indian developers’ caution into over-confidence. The resulting rise in prices of land and finished products over the past 2-3 years has been unprecedented. SEZ-related land acquisitions, eye-popping IPO valuations of real estate companies and poor farmers turning into crorepatis overnight have fuelled land value across the country. There is no data stating that FDI is responsible, but it affected the overall sentiment of the sector.

Today — as AIM and the Indian public market are shut for the time being, and the government and RBI tighten norms on availability of debt — private equity remains the most reliable source of capital. In the past two years, the newly-arrived funds were chasing the developers. At a conference in Mumbai last November, foreign investors outnumbered Indian developers 4:1. Many were intermediaries posing as investors. REITs came to mean real estate investment tourists who stay in hotels, issue MOUs and leave, never to be seen again. Looking ahead, the playing field will be more even. Developers that are transparent in their practices will attract more private equity funds. Not all funds are run by seasoned investment professionals, and the market will start to appreciate the difference over time.



Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

What's up at Moser Baer?

Business Today article on Moser Baer's new moved - including its highly visible entry into selling Indian movie titles.
Moser Baer reported a net loss of Rs 11.15 crore in the April-June quarter of 2005-06 (it showed a profit for the full year, though). Severe global pricing pressures coupled with competition from other low-cost producers and rising raw material prices eroded the exceptional returns that the industry was known for. Though the downturn was not unexpected, its duration and severity came as a rude shock.

Ashish Dhawan, Senior Managing Director of private equity firm ChrysCapital, which invested in Moser Baer during this downturn, says: "The downturn lasted longer than any of us had anticipated." Cost efficiencies helped sustain Moser Baer during this phase. It was also a period of learning, and the lessons were immediately implemented. Ratul recounts that despite the downturn, the company continued pumping funds into the business. Over the last four years, Moser Baer has invested over $1 billion (Rs 4,300 crore) and a large chunk of this has been spent on climbing up the technology curve.


As the downturn began petering out in early 2006, the hugely capital-intensive blank optical storage business again showed promise of generating massive amounts of free cash. "A year ago, we felt that over the next three years, the blank optical business would generate around $500 million (Rs 2,150 crore) of cash," says Ratul. So, an expansion and diversification was clearly in order. The big question was: in which industries? "Part of that free cash will be deployed in businesses that are adjacent to our existing business. Synergies will have to come from marketing, distribution, manufacturing and research and development," says Ratul.

THE MOSER BAER MATRIX
The company's business portfolio will look very different in a few years.
BUSINESSES: Optical storage
REVENUE SHARE: 30-33%
STRATEGY: It is a volume business and MB will leverage its position as one of the lowest-cost producers in the world.

BUSINESSES: Entertainment
REVENUE: 20%
STRATEGY: To acquire 10,000-12,000 movie titles and price them low.

BUSINESSES: Photovoltaic
REVENUE: 40%
STRATEGY: It is betting on 4-5 already proven technologies.

BUSINESSES: New businesses
REVENUE: 10-odd%
STRATEGY: not disclosed.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Profile of TPG-Axon

NYTimes DealBook provides extracts from Absolute Return magazine's profile of the hedge fund which is run by a group of ex-Goldman Sachs exectuives including Dinakar Singh and Hari Kumar.
“Most long/short hedge funds say that they’re alpha-driven,” Eric Dillon, chief investment officer of Silver Creek Capital Management, told the magazine. “But I think that there’s a lot of intellectual dishonesty out there. In our view, Dinakar has built a firm that will deliver over a long period.

Private equity firm Texas Pacific Group owns a stake in TPG-Axon, which Mr. Singh runs with former Goldman colleagues Taizo Hasebe, Hari Kumar and Eric Mandelblatt. The fund launched in 2005 with $5 billion in capital and and now manages $8.3 billion. From inception through March, the firm’s two-year annualized return stands at 19.3 percent, Ms. Wood wrote.

While those returns aren’t the best in the business, Ms. Wood suggests that the funds’ investors take additional satisfaction from the fact that TPG-Axon actually hedges. Balancing risk with opposing trades is something that many private pools of capital, despite being called hedge funds, often don’t do — or don’t do well.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.