StanChart’s PE arm sees 3-4 deals in India

StanChart’s PE arm sees 3-4 deals in India

Mumbai: Standard Chartered Private Equity plans to invest in three to four Indian firms by the end of this year and sees opportunities in acquisition financing in Asia’s third-largest economy, a top official said on Wednesday.

The British bank’s private-equity unit was focussed on investing in consumer-related and infrastructure businesses, as consumption and demand for roads, ports and highways rise, its India managing director Nainesh Jaisingh said.

“I would be surprised if we did anything less than three to four more deals. We have got a lot in the pipeline," Jaisingh, who joined the bank in Singapore in 2000, told Reuters in an interview.

“We are really positive about the country’s economic outlook and the prospects for Indian businesses."

India plans to award $50 billion of road projects in the fiscal year ending March 2011, and expects private investors to fund as much as 70% of the amount, the road transport minister told Reuters last month.

India’s economy is forecast to grow 8.5% in the fiscal year that began in April.

Standard Chartered Private Equity expects deal sizes and flows in India to increase on a recent government rule that requires listed firms to have a public float of at least 25%.

“That’s going to change things because a company, which was going to have a 10% listing, cannot do it now," Jaisingh said, referring to the new rule.

“They would much rather place that 10% with a private equity guy, wait till they become bigger and then go for listing. That should open up a huge market."

Jaisingh expects the size of some of the company’s deals to rise to more than $100 million each, from the $50 million to $75 million that it invests now in companies.

Standard Chartered Private Equity manages about $2 billion in assets in Asia.

It started India operations in 2004 and has put about $500 million in 12 companies such as engineering firm Punj Lloyd and software maker iflex solutions, which was bought by Oracle and renamed as Oracle Financial.

Acquisition Financing

Private equity investment in India fell more than 60% in 2009 during the global financial crisis, but has shown signs of a rebound in recent months.

Private-equity firms invested about $4.1 billion through 269 deals in India during 2009, compared with $10.3 billion from 452 deals in the year earlier, according to Venture Intelligence, a research service focused on private equity and M&A.

In the first three months of 2010, private equity deals in India totalled about $2 billion, Venture Intelligence said.

Jaisingh said that the private equity unit was seeing “huge opportunity" in acquisition financing in India, as a slew of local companies scout for buys in overseas markets to expand footprint and boost growth.

“We are having many more conversations today about helping companies make these large-ticket acquisitions than we used to have earlier," he said.

“In some cases they have already raised debts but it has like come to the eyeballs, so you want to deleverage and bring in private equity, and in some cases they bring us in while conversations are still going on." Standard Chartered Private Equity is looking to exit at least two companies through initial public offerings within one year, Jaisingh said, but refused to give details citing regulatory issues.