Citi Venture Capital International (CVCI), a large private equity (PE) player in India, is restructuring its focus to chase big-ticket deals.
The PE fund has invested close to $1.1 billion (Rs 5,115 crore) in India across 40 deals. It is understood to have decided to focus only on the $50 million (Rs 230 crore) and above bracket of investment deals and not spend time in the sub-$50 million space. CVCI has been straddling both these segments in India and according to investment bankers close to it, it may look at exiting some of its portfolio companies in the sub-$50-million space.
The bankers said they had been sounded on this strategic shift. “This is the message we are getting from CVCI,” one of them told Business Standard.
With this revamp in focus, CVCI will join the likes of blue-blooded global PE players like Bain Capital, Texas Pacific Group, KKR, Temasek, Blackstone and the like, who focus on writing cheques above $50 million.
Citi said: “Given India’s attractive and sustained GDP growth, strong investment fundamentals and the emergence of a large and affluent middle class, India is one of the most attractive markets globally from an investment perspective. CVCI’s investment approach in India remains focused on the most attractive opportunities available across a broad range of industries in high-growth sectors, where CVCI sees clear potential for growth and value creation.”
Recent shift
CVCI’s shift in focus follows the recent trend of Indian companies raising large PE sums. Coffee Day Holdings had raised $200 million from a group led by KKR, Standard Chartered Private Equity and New Silk Route. The largest investment was Olympus Capital’s $300 million investment into Tata Power’s SPVs for Indonesian coal mines. Other top investments include TPG Capital’s $217 million investment into Shriram Capital and Temasek’s $200 million and $175 million investments into GMR Energy and National Stock Exchange, respectively.
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According to Venture Intelligence, a research service focused on Private Equity & M&A: “In 2010, the top 10 PE Investments account for 43.5 per cent of the overall investments, the highest in the last four years. This clearly indicates the return of appetite for large transactions, especially in infrastructure-led sectors like energy, engineering and construction, healthcare and telecom.”
Commenting on large PE deals making an increasing presence in India, Arun Natarajan, MD & CEO, Venture Intelligence, said: “During the second quarter of calendar 2010, we saw the sustaining of the appetite for larger ticket deals than had emerged in the previous quarter. For the first time since Q3 of 2008, the latest quarter witnessed as many as seven investments over $100 million.”