Pvt equity majors ready to pump in $3-4 bn

About 15-20 private equity funds, including new players, are set to enter the domestic market this year. Despite rising valuations, around $3-4 billion are lined up for fresh allocations this year, compared with about $2.2 billion invested in 2005.

The funds are willing to pay a higher price instead of missing the Indian story by sitting on the fence. "While the allocation can be $3-4 billion, many funds would be paying more this year, compared with last year, given the way the stock market has moved," said Vaibhav Mehra, head (India), SAIF Partners, which is sitting on $650 million out of its $1 billion fund.

"Some funds could actually end up operating like hedge funds as long term deals would be tougher to find in the present market," adds Mehra.

The funds, it seems, do not want to miss the India story as many did in China. China still tops as private equity destination owing to lack of developed banking and capital markets.

SAIF partners is close to finalising another deal in the country. "It will be either in mobile value added, gaming or media space in the next one month," Mehra said.

Sources confirmed gobal majors such as Kohlberg Kravis Roberts (KKR), with $21 billion in investments, and Germany-based AXA Private Equity were planning to foray into the country. AXA is looking to invest out of their $550 million Asia fund.

New funds are mushrooming. Indusview CEO Bandeep Singh Rangar is setting up a fund with Xansa (India) Chairman Saurabh Srivastav.

"We are in talks with the investors for our new fund, which should be finalised in about 2-3 weeks," said Rangar said adding that funds also have to look at SME businesses in tier II cities to find 'good' deals.

"Private equity is looking at lot more sectors now. This year should easily outperform 2005," said Pankaj Dhandharia, partner, Ernst & Young. After China, India is considered as one of the hot markets. Real estate, construction, media auto ancillary, pharma and health are the emerging sectors.

Apax Partners, with about $20 billion under its management, has appointed Max Burger Calderon as the partner for India and China for allocation from its Asia pool.

According to sources, Bangalore-based EurIndia is learnt to be raising $150 million with Deutcsche bank investing in it. This is their second fund, last one was a small fund 30-35 million.

According to Citigroup Property Investors, the real estate investment arm of Citigroup is entering India. Sources indicate a long line up of real estate funds including Colony Capital Asia Pacific, headed by Kishore Moorjani and Singapore based Capitaland, which provides financial services for real estate-related investments in Asia.

JM Financial is setting up a $150 million fund, to be run by Dilip Kothari, who was earlier with Olympus Capital. The seach for new investment nuggets is set to get fiercer with existing players also sitting on big money.

"There is a lot of dry power from the existing players," said Puneet Bhatia, chairman, Newbridge Capital. Newbridge Capital raised $1.5 billion for Asia last November. Bain Capital is looking to invest in India.

Draper Fisher Jurvetson (DFJ) which has been present in India through its arm Draper International is raising a $150 million for investing in India. Goldman Sachs has already announced that it will invest $1 billion in India in the next couple of years.

The US-based Thomas Weisel Partners is raising $300 million for their second 'fund of funds' for investing in Asia and India. The UK-based Electra Private Equity is raising $200 million of which $100 million is expected to be allocated to India.