The Hindu Business Line : Private equity cos invest over $66 m in IT sector

PRIVATE equity firms invested over $327 million (Rs 1,400 crore) in 30 Indian companies during the quarter ended March 2005. According to data from TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide, the amount invested in the latest quarter was higher compared to the corresponding period last year (12 companies had raised about $300 million), but lower compared to the October-December 2004 quarter (31 investments totalling about $450 million).

The January-March 2005 quarter witnessed nine companies each raising investments of $10 million or more. "While information technology (IT) companies topped in terms of number of deals, the textiles sector cornered the most money during the quarter," said Mr Arun Natarajan, Editor, TSJ Media.

The IT sector witnessed five companies — including IT services firms Caritor and KPIT Cummins Infosystems, and financial software products firm Financial Technologies — raising about $66 million (Rs 280 crore).

Investments in the IT enabled Services (ITES)/Business Process Outsourcing (BPO) sector, which attracted the maximum number of investments in the last two years, were conspicuous by their absence in the latest quarter.

The textiles and garments sector saw two companies — Sintex Industries and Welspun India — raising $73 million. The hotel industry witnessed three firms raising a total of about $60 million. The banking & financial services sector attracted two investments — in Shriram Transport and Indiabulls Credit Services — worth about $42 million. Four life sciences firms notched up $23 million for the sector. Private equity firms were also attracted to the automobile industry and invested $15 million to acquire stakes in companies such as CG Igarshi Motors, AVTEC and Swaraj Mazda.

Late stage investments continued to dominate with 19 PIPE (Private Investment in Public Enterprise) deals during the quarter. "In addition to this, subsidiaries of listed companies — Max HealthStaff and Indiabulls Credit Services — nibbled away at the amounts leftover for private companies," said Mr Natarajan.

The $7.5-million second round raised by Bangalore-based biotechnology firm Avestha Gengraine Technologies stood out as the sole early-stage investment reported during the quarter. In another notable venture capital deal, Arch Pharmalabs, a Mumbai-based maker of active pharmaceutical ingredients, raised a $4.44 million third round from IL&FS Ventures.

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Private equity cos invest over $66 m in IT sector