GM, Gartmore arms eye pvt equity deals

Global private equity players are now heading to the country. General Motors Investment Management Corporation (GMIMC) and the US-based Gartmore group have India firmly on their radar.

GMIMC is "casing the Indian corporate space for suitable private equity investments," a top company official said in Mumbai.

"We are evaluating India in terms of private equity investments," said Anubha Shrivastav, investment analyst, global private market group, who is currently in India.

"We have been here for a while and everyone is asking when we are going to start writing on our cheque books," said Pavan Gupta, portfolio manager, private equity with Gartmore Investment Management Plc.

GMIMC is a subsidiary of General Motors Asset Management, which manages assets on behalf of the parent company General Motors. The AMC manages $100 billion assets across various asset classes and investment objectives, while GMIMC has $5 billion invested in private equity, both directly and through funds.

For India and the surrounding markets, GMIMC has an allocation of $450 million. Investments can be done both directly as well as through other funds.

Gartmore Investment Management, the Gartmore group's London-based flagship international component, is a subsidiary of US insurance bigwig Nationwide, which acquired it in 2000.

Gartmore, based in Philadelphia, is the global asset management arm of Nationwide and its affiliated advisers collectively manage more than $76 billion in various assets.

Gartmore Global Investments, which forms the advisory group to GIM, has more than $39 billion in assets under management.

Shrivastav said they were checking out opportunities as their previous investment experience in Asia was "disappointing". "We got very poor returns," she said.

Gupta said that despite private equity companies having highly skilled people, "private equity markets are not efficient as they misallocate capital."

He pointed out that his firm's current focus was Asia. "We are looking at buyouts in Japan, Australia and South Korea and looking to put our assets in growth markets such as China and India," he said.

So while India is seen as a strong growth destination, any investments in a company in the form of private equity would be looking at a modicum of `control' and not merely passive investment. "Passive investments have not been successful in the past (in Asia)," Shrivastav said.

However, she added that control would not mean management control, but being `hands-on' in the strategy adopted by the company.

All this would be done to ensure returns on the investments made.

However she pointed out that there were some areas of concern in the corporate sector in India. While there were enough drivers for growth, interactions with various groups in India had led them to the conclusion that disclosure and corporate governance standards were not very high in India.

Gupta said that everything in India was "improving", though he spoke of a "strategy shift" meaning a lack of focus so far as portfolio managers are concerned.

GMIMC is headquartered in New York. Of the $5 billion invested in private equity, around $1billion has been raised externally and is invested via funds of funds or is co-invested alongside the firm's direct investment programme.