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June 30, 2008

The business of wealth management

As part of its cover story on India's super rich, Businessworld has an article on how the business of wealth management in India is getting increasingly sophisticated.
It is still rather boutique in nature, but is getting bigger by the day: the business of banking for the wealthy. New age and top-line multinational banks are wooing India’s nouveau-rich with private banking services, a suite that covers onshore and offshore investment advisory, trust services, and real estate and portfolio management. It’s about helping these essentially simple people on what to do with their money; about the when, where and how of going about it.

...More commitment may also entail putting your money where your mouth is, often in what is called co-investment deals. Citi Private Bank, for instance, invests its own capital alongside the client’s investment. “Such co-investments could be in the form of a private equity deal, a hedge fund, a structured investment opportunity in real estate or something much more sophisticated,” says Chadha.

He gives the examples of Citigroup Property Investors Capital Partners Asia Pacific, a $800-million fund that provides its clients access to real estate investment opportunities across Asia; And of Capital and Real Estate Development Fund, a $400-million fund aimed at those looking for real estate investment opportunities in China.

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.

Why did Subhiksha go in for a reverse merger?

In an interview to Business Standard, R Subramanian, Founder & CEO of value retail chain Subhiksha, on the company's recent move to go public via a reverse merger.

What happened to your IPO plans?
There are multiple ways of raising funds. But since markets are changing, it is very difficult to structure capital raising plans in the current situation.

However, we have good capital base and we will do whatever is needed for the company's growth. Since we have acquired a company now, we should go for a follow-on offer (FPO), which can happen anytime after the merger process is complete.

How will inflation and high rates impact the retail sector?

I see retailing of luxuries such as premium clothing and electronic gadgets growing at 10 to 15 per cent this year compared with 30 per cent earlier. I do not see much impact in food and grocery retailing.

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 24, 2008

ISO 9001:2000 Certified, Global Recruitment Consultancy seeks Strategic Investment / M&A

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We are a decade-old Bangalore based Recruitment Consultancy servicing Tier-1 IT MNCs for their global vacancies. We have developed an e2e in-house application software enabling total process automation (paperless office) built on an agile strategy that absorbs the market trends. It also facilitates instantaneous seamless integration of operations by globally dispersed teams and remote monitoring of the functioning of workforce across levels, as desired.

Global expansion and upgrading our software as a product, are on our agenda.

Interested Investors/M&A partners may contact bestviv@gmail.com

Sovereign Wealth Funds: The Emerging ‘Supermen’ of Private Equity LPs

By Rajesh Begur, Partner, A.R.A. Law



“A sovereign wealth fund (SWF) is a state-owned fund composed of financial assets such as stocks, bonds, property or other financial instruments.”

While some SWFs have major economic and fiscal importance, others might not have significant role in fiscal management. But the major purpose of SWFs is to maximize long term returns.

Origin: Most of the savings of SWFs originate in accumulated foreign currency reserves. This was done as follows: the reserves used to be earlier held only in gold till the U.S. came up with the Bretton Woods System, where dollars were pegged against gold, which thus lead to dollars (or now, other currencies like Yen or Euro) being used as foreign currency reserves.

Creation: SWFs are typically created when governments have budgetary surpluses and have little or no international debt. It is not always desirable to keep the excess liquidity as money or to immediately use it up in consumption, especially when a nation depends on raw material exports like oil, copper or diamonds. To reduce the volatility of government revenues, counter the adverse effects of the boom-bust cycles' on the national economy or build up savings for future generations, SWFs may be created. Other reasons for creating SWFs may be economical, or strategic.

Investment Strategies: The investment strategies and criteria differ widely for various countries. Theoretically, SWFs are just like any other independent investment funds. Most SWFs do not publicly disclose their investments, making it difficult to get a sense of their assets or their investment strategies. Most SWFs could reasonably be expected to use long-term investment strategies. Also majorly, SWFs are not highly leveraged, which differentiates them from some large hedge funds.

Examples: Several SWFs have gained public attention for specific investments. China’s fund invested in major U.S. financial firms. Temasek Holdings, a fund managed by the government of Singapore, had invested 38 percent of its portfolio in the financial sector as of September 2007. In 2005, a United Arab Emirates-owned company, Dubai Ports World, stirred controversy in the United States by purchasing a British-owned shipping company, thus giving it control over parts of several U.S. port facilities.

Dubai Ports World is a state-owned business, not a sovereign wealth fund, but the concerns provoked by the incident mirror concerns over SWFs purchasing business interests that had formerly been the domain of private companies. Another famous one that rolled the headlines was Singapore’s GIC (Government of Singapore Investment Corporation), the sovereign wealth fund that ploughed $8.9bn (£4.5bn) into Swiss bank UBS and on a spree with a $1.5bn investment in private equity firm TPG's latest $20bn fundraising. Even the world’s number 2 holder of reserves after China, Japan (with $948 billion) has been actively considering establishing an SWF of its own.

Although SWFs have been on a rise, but with emergence of greater number of SWFs, emerge new issues which need to be addressed. SWFs might be highly lucrative for PE setups, but they tend to have greater ramifications on the global front, both political and financial.

Advantages: There have been an entire multitude of opinions which treat SWFs as a positive trend, owing to its “on the face” benefits.

• More efficient government investment potentially means more government money. For the countries making the investments, this would lead to lower taxes, better public works, and stronger state-run businesses.

• SWFs offer a viable mode of sustaining long term capital growth for exporting countries who aim at long term economic viability and stability.

• Even for the companies being invested in and their countries, SWFs lead to greater capital inflows. This would mean more money for research and development, and more money to pay salaries.

• They may have a more stabilizing influence on stock markets because they are generally long term and hold the securities and stay invested for a longer time.

• There is a definite increase in the rate of return which is a result of diversification of holdings and large scale investments.

• One global advantage of SWFs having a non-financial outcome has been the southern shift in economic balance in recent years. The US has been losing its hegemonic role even in financial markets and other players are coming up.

Concerns: SWFs may also pose a danger to the global financial system and otherwise, as has being contemplated in the recent years:

• It is suggested that SWF operations are opaque, i.e., they lack transparency. Very few of them publish information about their assets, liabilities, or investment strategies and this leads to a number of other problems.

• A major concern being expressed is regarding the motives behind these SWFS. It is being apprehended that if guided by political or other considerations, SWFs can have a greater negative impact at the international front. A common example of this may be a government could use SWFs to learn how companies in other countries operate, then use this information to bolster rival state-run enterprises. Or another example, for that matter, can be when the SWFs use their powers as shareholders for political motives.

• Another problem associated with SWFs is that they are not regulated by any single authority, rather are often always regulated by multilateral organizations.

• Another commonly perceived risk of SWFs is the danger of rogue traders, who may take risky positions using their command over Sovereign Wealth Funds.

• It is apprehended that SWFs may encourage capital account protectionism, through which countries pick and choose who can invest in what, in the sense that various countries may try to pick and choose what fund can invest where. This emerges as a main concern while dealing with SWFs.

• Further, there are questions of national sovereignty which relates to interference of one country into the other country’s matters and policies through the channel of financial interests.

• SWFs are a throw-back to the end of the nineteenth century, when large pools of capital moved unregulated around the world generating a global boom, along with a fair number of crises.

• As sovereign funds grow in importance, they may take up the form of an unregulated set of intermediaries which may or may not invest with hedge funds in the future and thus it may become increasingly difficult to regulate them.

Market Response: SWFs being based on current account surpluses, major countries have committed to reducing their current account imbalances. This would limit the growth of sovereign funds. But the world economy evolves continuously in ways that make it hard to be sure current account imbalances will shrink. For example, global growth may accelerate or decelerate, and this is likely to affect commodity prices. But if commodity prices remain high, commodity exporters will have large surpluses for the foreseeable future. If commodity prices fall, the surpluses of Asian countries that export manufactures may increase.

Different countries are expected to respond differently to the growth of SWFs investments in them. For example, recently, the Indian government has made its intention clear that till the time the SWFs investments from abroad do not attain a critical mass and have the potential to abuse their economic strength detrimental to the country’s national interest, there is no need for a fresh capital control measure. India, as on date, therefore, does not recognize SWFs as distinct entities and their investments are governed by the same regulations that address FIIs. Thus, protectionism, as we see, is a highly dynamic concept very specific to the nature and position of the market, as also the country invested in. [Source: “Atithi Devo Bhava: Sovereign Funds Policy won’t build wall”, c.f. The Economic Times, dated May 23, 2008, p.7]

Impacts: Finance ministries in the past typically invested currency reserves in U.S. treasury bills and other risk-free bonds issued by wealthy countries. SWFs provide countries with a broader range of investment options. A shift away from U.S. Treasury-backed bonds as the default option for government currency-reserve investments could hold ramifications for global currency markets. Most notably, the world could be witnessing the end of an age of dollar dominance.

This shift could, in theory, be broadly positive. However, the recent concerns that have been raised regarding SWFs need to be taken into account. Although the concept of countries investing in foreign markets is an age old one, but it taking the form of SWFs and widening the investment horizons is a relatively new phenomenon, the impact of which is still in the speculation stage. Thus, the true impact and response of various economies to SWFs is yet to be observed. However, what comes forth as a certain implication is that SWFs will undoubtedly trigger the protectionism mechanism in various countries owing to the political and sovereignty issues associates with them.

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June 23, 2008

Venture Intelligence Obtains High Court Injunction Against Copyright Violation by Boston Analytics

PRESS RELEASE

Chennai, India: Based on a complaint by Venture Intelligence, the leading research service focused on private equity and venture capital activity in India, the High Court of Madras has granted an injunction against Boston Analytics, a US- and India-based business research firm, for infringing the copyrighted data and information of the Venture Intelligence Private Equity Deal Database.

According to the Venture Intelligence complaint, Boston Analytics had attempted to sell - for commercial gain – a report on Private Equity investments in India using copyrighted data and information from the Venture Intelligence database. The High Court injunction has required Boston Analytics to immediately stop marketing and sales of any product or service containing data / information from the Venture Intelligence database.

“Subscription / access to Venture Intelligence databases, newsletters and reports is meant for internal and non-commercial use. Our terms and conditions are very clear that, except as expressly authorized by Venture Intelligence, no one can sell, rent, license or otherwise transmit any Venture Intelligence materials or content," pointed out Arun Natarajan, Founder & CEO of Venture Intelligence. "Venture Intelligence will not hesitate to rigorously defend and protect our intellectual property against any sort of violation," he added.

About Venture Intelligence
Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading provider of information and networking services to the private equity and venture capital ecosystem in India. For more information about our products and services, please visit http://www.ventureintelligence.in

Status check on large retailers

Business Today has a cover story providing a status check on the plans of large retailers including Reliance Retail, Bharti-Walmart, Birla Retail, Future Group, etc.
Consider the rollout— which (Raghu Pillai, President & CEO, Retail Operations & Strategy, Reliance Retail) would rather term a “cloudburst,”—so far: Hypermarkets, Reliance Town Centres, supermarkets, convenience stores, specialty stores (digital, health and wellness, apparel, etc.), rural business hubs; in categories like food & grocery, consumer durables & electronics, auto care and lifestyle. The big bang of course has been in foods & grocery, where RRL has 572 Reliance Fresh stores across 59 cities. And there’s the biggest store in India, the hypermart that’s branded Reliance Mart (there are three of them so far), in Ahmedabad, spread over 165,000 sq. ft.

...By July the hypermarts will be spread over 1 million sq. ft. Currently, RRL is spread over 3.5 million sq. ft (1.5 million sq. ft being hogged by the 572 Reliance Fresh stores selling fruits & vegetables)— all done over the past 17 months, which has company officials boasting that this is the fastest rollout on such a scale in the world.

“In categories like garments and lifestyle, and to a certain extent consumer durables, (organised retail) has made significant progress. But in foods and grocery, the biggest market, the action has yet to play out,” says Pillai, who is also on the board of RRL.

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 comics venture ACK Media

Business Today has a profile of comics venture, ACK Media.
By acquiring Amar Chitra Katha (ACK) and Tinkle, two wellknown (and much loved) comics from its publisher India Book House. A long-time fan of both titles, (Samir Patil) is now in the midst of redesigning the comics, to suit 21st century audiences and expand the scale and reach of these titles to kick-start its revival. “Sales were growing very slowly and there were very few value-adds to both ACK and Tinkle over the last few decades,” says Patil.

...“We estimate that our target market is around 300 million people below the age of 16 in India and as many as 4-5 million households overseas. The latter hasn’t really been tapped by the animation industry,” says Patil. Besides digitising content and putting it up on the internet, Patil is also looking to monetise some of these characters by having games and other online content based on them. ACK Media is bank-rolled by Patil and his partner, Shripad Morakhia, a serial entrepreneur behind financial services firms such as SSKI and Sharekhan. The duo plans to build its one-year-old start-up and spread its wings into new mediums, including TV and the mobile phone.

Patil took the first step in this direction when he acquired Karadi Tales, which has some 45 titles in multiple formats (print, audio and video) and counts well-known artistes like Naseeruddin Shah, Gulzar, and Girish Karnad as narrators of its stories.

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 15, 2008

RBI guidelines on mobile payments

Mukul Singhal of Canaan Partners has started an interesting discussion on the implications of the Reserve Bank of India's new Draft Operating Guidelines for Mobile Payments in India.
* This would bring services like eWallet / mWallet / Store value cards under RBI scanner and I see a regulatory risk in such businesses

* The bank has recognized the long term goal of mobile payments to enable Peer to Peer (or Peer to Business) money transfer. However; RBI has also limited this scope to bank accounts. Implications: I think businesses like Paypal might not pass regulatory hurdle in India. All operators & service providers have to partner with banks to enable payments involving mobile. I also don’t see any hope for relaxing this in future.

* RBI has also raised the entry barriers for new entrants. Banks have to take board approval for offering such services to their customers. It would mean longer sales cycle – good for existing players but bad for new ones.

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, 2008

India's booming "Sin Economy"

Businessworld has a cover story on how "as Indians lap up more of vice products, profiteers and investors are readying to lick up the spoils of the new consumption patterns".

The most popular vice, however, is gambling, which is also illegal. Still, unlawful betting in the IPL cricket season is averaging $100 million per match. On match days, youngsters, pot-bellied traders and Page-3 regulars can be spotted in coffee shops, restaurants and even the stadiums, glued to cellphones, haggling hard with bookies. Betting on horse races and lotteries is subject to state laws. Indians are buying over 30 million lotteries a day. The market is valued at Rs 50,000 crore. “The market can grow manifold, provided the government rationalises its lottery policy, legalises gambling and betting, and opens the market to foreign investors,” says Kamlesh Vijay, CEO of Sugal & Damani (S&D) Lotteries. The Rs 6,000-crore, travel-to-jewellery company has been selling lotteries for the past three decades. Earlier this year, it bid for UK’s national lottery, proposing ticket sales of £63.9 billion over 10 years. The evaluators declared it the reserved bidder. That has brought returns-hungry investors to its doors and its competitors’. “Some of the largest US private equity funds have approached us, however, the laws disallow FDI in lotteries,” says Vijay. S&D’s profits grew 60 per cent last year.

Another success story is Zee-promoter Subash Chandra’s lottery venture — the media moghul’s biggest business now. Last year, his lottery brand Playwin turned in Rs 2,400 crore, towering over his media (Rs 1,500 crore), packaging (Rs 1,000 crore), and the entertainment and real estate businesses.

...Corporate India’s gambling ambitions include India’s answer to Vegas. Hotel Leelaventure and Playwin have bagged licences to own and run live casinos in Goa, home to the country’s sole casino, with live roulette. Owned by Advani Hotels, Goa Casino attracts 17,500 dedicated casino-goers a year. Big corporate groups including real estate giant DLF are also awaiting Sikkim’s decision on bids for five-star casinos.

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.

Whither funding for Independent Drug R&D Cos.?

Businessworld has an article examining the implication of the reported pull out by PE firms from their R&D joint venture with Dr. Reddy's Labs, Perlecan Pharma.
“The absence of a dedicated separate management team for standalone research entities like Perlecan may also be partly to blame,” says Nangra. Perlecan remained a paper entity with neither a dedicated management, nor its own office. These are lessons that its followers may not want to repeat.

...The current crisis is not specific to Dr. Reddy’s but may be symptom of larger ills plaguing Indian pharma R&D. Industry insiders point to a whole range of issues affecting the industry such as limited resources — financial and human — and a certain lack of direction in R&D programmes and coordination between scientists and managers.

“Right from the beginning of a new drug’s development, one should know which pharma companies would be likely to in-license it and make the drug attractive,” says Swaroop Kumar, former R&D chief of Mumbai-based Glenmark Pharmaceuticals. “Good science is not enough.”

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 11, 2008

8 cos. short-listed for TiE-Canaan Entrepreneurial Challenge

8 companies have been shortlisted for the final round of TiE Canaan Entrepreneurial Challenge.

Name

Category

Location

11rupees.com

Internet - Financial Services

NCR

Good Morning Research

KPO - Financial Services

NCR

Druvaa Software

Software

Pune

Ginni Systems Limited

Software

NCR

iKen Solutions Pvt Ltd

Software

Mumbai

Infogile Technologies

Mobile

Hyderabad

Rx Healthcaremagic Pvt. Ltd

Internet - HealthCare

Bangalore

Micro Finance India Private Limited

Financial Inclusion - MicroFinance

Chennai


The contest received 140 business plans with the maximum number of plans from the "Enterprise Software" segment. Other sectors from which business plans were received included Education & Training, Financial Services, Mobile and SAAS.

June 10, 2008

Deal Alert: Landmark Holdings picks up 10% stake in Pune township & SEZ project

Edited excerpts from press release:

Landmark Land Holdings Pvt. Ltd., the real estate investment arm of the Dalmia group, has finalized a deal with Pune-based Kumar Builders to invest in an Integrated Township & S.E.Z. project at Hinjewadi suburb of Pune. Landmark has acquired approximately 10% Equity in the project for an undisclosed sum, with an option for additional investment upto 49% in the SPV.



The project size is 124 acres of land, with a saleable area of around 10 mn. sft. and an expected revenue in excess of US$1 billion. The project site is 2.5 kms away from the Mumbai-Pune Expressway, and adjacent to the Rajiv Gandhi Software Technology Park.

Landmark is quite bullish on Pune as a destination, which is emerging as an alternative IT hub. With its proximity to Mumbai, and with Bangalore & Mumbai’s resources having been tapped to saturation levels, it is envisaged that the migration of several IT companies here is slated to be an ongoing process.

Landmark’s development partners, Kumar Builders, has successfully completed over 100 projects, with another 30 projects in the pipeline.

Prior to this investment, the Landmark group already has in its portfolio 20 ongoing projects, which are pan-Indian in their scope and spread, with a total sales value in excess of US$5 billion.

Deal Alert: Mobile payments co. PayMate raises $9-M Second Round led by Mayfield Fund

Mumbai-based mobile payments company, PayMate India Pvt. Ltd., today announced the closure of its second round of investment of US$9 million led by Mayfield Fund with participation from existing investors, Kleiner Perkins Caufield & Buyers and Sherpalo Ventures. Nikhil Khattau, Managing Director of Mayfield Advisors, will join the Board of PayMate.



The two year old PayMate operates in the arena of electronic payment solutions to enable transactions on mobile phones and wireless devices for Indian & Global markets. PayMate has ventured into significant tie ups with thirteen Global and Indian Banks - including, amongst others, Corporation Bank, Cosmos Bank, Bank of Ceylon, HDFC, Standard Chartered Bank, Canara Bank, ABN Amro - to introduce unique m-banking solutions for their customers.

PayMate has more recently launched a mobile gift voucher program, Gift Mate, which offers the flexibility and choices that are not available with traditional vouchers. Moreover, it has also allied with telecom service providers like Tata Indicom and airlines like KINGFISHER to enable its subscribers to book flight tickets anywhere, anytime on the mobile. PayMate’s latest initiatives include utility bill and insurance premium payments.

In July 2006, Sherpalo Ventures and Kleiner Perkins Caufield & Byers had invested a total of $5 milllion in PayMate.

June 09, 2008

8-Yr Old, Profitable South India Film Portal Seeks Strategic Investor / M&A

An eight year old South Indian film portal with a Subscription model is looking towards investment from strategic players/M&A opportunities. The portal has more than 10,000 subscribers, 8 lakh registered users and 7,000 people visiting the site daily.

Interested investors may contact us at tcmohan@gmail.com

Sale of Shares of Leading Global Domain Registry Co, Afilias Limited.

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Omkam Global Capital is a management consultancy and boutique brokering division based in New Delhi enabling collaborations, syndication of funds and PE / VC deals.

Vrinda Portfolio P Limited, our client, wishes to sell 25000 shares of Afilias Limited, Ireland. Afilias is a global leader in advanced back-end domain name registry services and provides a wide range of advanced capabilities essential to the smooth and efficient operation of any Internet domain name registry. This is a privately held company but the stock is highly in demand. More detailed information about this Company can be found at http://www.afilias.info/about_afilias/backgrounder


Interested buyers may contact info@omkam.in or call Abhishake Agarwal at 09873459960

Madhya Pradesh-based hospital and healthcare education trust seeks >$5-M

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Based in Ujjain, MP, we are in the healthcare & education sector since 1992. We have two hospitals – one with 350 beds (Vidhyaben Deepchand Gardi General Hospital) and another with 570 beds (C. R. Gardi Hospital). We have the credit of starting the first Private Medical College in Madhya Pradesh. We also run a College of Nursing and College of Physiotherapy. Our total patient turnover is about 1,500 patients/day.

Interested investors may contact Vijay Kumar Mahadik at Tel: +91-734-4013621; Fax: +91-734-2559147; Email: uctharc@sancharnet.in

Animation firm seeks $2-5 M

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Chennai-based Animation Production Company, present in verticals such as Animation Production, Training, Post-Production with a very strong customer base in India, with Projects in hand for full length animated feature film from Hollywood, wishes to induct a private equity partner.

The funds are to be used for opening up a new animation college, Co-Productions with a well established Hollywood company, expanding to new markets with it's cutting-edge techniques that it has developed in animation and strengthen the current market share. The company has a great track record and owns IP. Media & Entertainment sector has a huge growth potential with great ROI.

Interested investors may contact investoon@gmail.com

Oil Prices & Global Investors

Today's Economic Times had articles by two well known fund managers - Ruchir Sharma and U R Bhat - on the topic of oil prices.

From Sharma's article:
The parallels are indeed striking between the late stages of the tech mania and the current oil boom. Both mega trends were rooted in a powerful economic shift; while the tech boom was associated with several technological breakthroughs and new ‘killer applications’ for mass use, the oil-led commodity boom is attributed to the rapid industrialisation of emerging markets.

At some point, however, investor imagination begins to overstate reality. With oil prices doubling since mid-2007, without any major corresponding change in the supply-demand dynamic, there are now widespread signs that the myth has again transcended the truth. While it’s hard to predict exactly when the deeply entrenched uptrend will reverse, it’s important to be fully aware that psychology rather than fundamentals is currently spurring oil prices.

...Myth 2: Emerging market demand is main determinant of oil prices. Unlike most other commodities, where China is indeed the price-setter, OECD demand is still the most relevant factor when it comes to oil. The US consumes 25% of global oil compared to 9% for China. US oil demand has contracted by 5% so far this year, as demand destruction is in the works.

From Bhat's article:
The status of oil as just another commodity changed dramatically in the early 1970s when the oil producers got together and quadrupled the price of oil. Most of the countries reliant on imported oil responded sensibly by using the price mechanism to reduce oil consumption by imposing heavy doses of taxation on the commodity before it reaches the consumer. In India, petrol and diesel are subjected to various kinds of government taxes and levies — right from customs duty on imported crude, to excise duty, sales tax, entry tax, octroi, etc. As a result, even after the recent price hike without factoring in any prospective reduction in state sales tax, at current crude oil prices just under half of the retail price of petrol and just under a third of the price of diesel are accounted for by taxes and levies of the government.

However, given that taxing petroleum products is one of the main sources of revenue for the government, it is unlikely that the incidence of taxation on these products can come down significantly further. Moreover, the hike in retail prices is not just about passing on the increase in crude prices but more importantly, about moderating consumption.

...The status quo where the oil companies are made to bleed — though a bit less than the Rs 650 crore per day they were losing till last week — is clearly a sub-optimal solution for want of decisive policy action. Despite all the talk of excessive subsidies on petroleum products, the government has been indulging in some inelegant financial engineering where taxes, duties and levies on petroleum products are collected from the consumers in cash and a part of this amount is returned to the oil companies in the name of subsidies as illiquid bonds — which are inappropriately referred to as off-balance sheet items.

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 02, 2008

UK PE fund seeks to invest $250-M

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A UK PE fund, based in London, doing global deals wishes to immediately invest up to US$250 million in a non-listed Indian Company. Any Industry / Sector with a minimum last / current year EBITDA of US$60-100mn and a revenue growth of at least 25-35% on YOY basis.

Company / investment bankers, with firm mandates, having any such proposal may urgently forward a one page brief on the Company on a no name basis to arthur.pallmall@yahoo.co.uk

June 01, 2008

VC Market

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

08-05-28-1: Mumbai-based animation software company, producing original animated content for the Indian market, seeks to raise $1-M

08-05-28-2: Kolkata-based online business consulting services for entrepreneurs seeks to raise $100-K

08-05-28-3: Ujjain,MP-based Hospital & Healthcare Education Firm seeks to raise >$5-M

08-06-04-1: US-based entrepreneur, planning a Law College in Bangalore, seeks $300 K for start-up and working capital.

08-06-04-2: Mumbai-based Real Estate consulting firm, specializing in helping retail brands identify appropriate properties, seeks to raise $1-5 M for working capital and marketing.

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