Standard Chartered Private Equity planning 3-4 Indian investments in 2010 as opportunities increase in acquisition financing

The Standard Chartered Private Equity announced it has three to four planned Indian investments in the pipeline by end of 2010. According to the bank, opportunities abound in acquisition financing in the country, the third largest economy in Asia. Its Indian unit managing director said the bank’s private equity segment hopes the recent government rule requiring listed firms to have a public float of a minimum of 25% will see deal sizes and flow increase.


In an interview with reporters, he said the bank expects not less than three or four deals, adding that it still had additional investments in the pipeline given India’s impressive economic outlook and the better prospects for Indian businesses. The Asian arm of StanChart Private Equity has a portfolio of $2 billion in assets and began its operations in the country in 2004.


Up to date, the bank has invested around $500 million in 12 firms such as Punj Loyd, an engineering company, and iflex solutions, a banking software developer that Oracle bought and later renamed Oracle Financial Services. The bank’s private equity segment further said it intends to focus on investments in consumer related and infrastructure businesses given the rising demand for roads, ports and highways and overall consumption.


The planned foray into more infrastructural investments is motivated by a planned $50 billion in road projects by the Indian government in the financial year ending March 2011. In its last month’s announcement of the infrastructural development, the government said it expected about 70% of the investment to be funded by private investors, with the country’s economic growth being projected at 8.5% for the FY that began in April.


The government’s new listing requirement means that companies with a 10% listing cannot list; therefore, such companies would be forced to place the 10% with an equity firm for growth to the required percentage before listing. According to Standard Chartered, there is a big market potential in this. The MD further said he expects to raise around $100 million from the investments in the companies, saying their sizes would increase the amount raised from previous values at $50 million to $75 million that it currently invest in companies.


Private equity investment in India fell more than 60 percent 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.


June 18, 2010.