Indocean Chase Capital Advisors, which manages Indocean Fund I, Oppenheimer Guaranteed, India Private Equity Fund and proprietary funds for Chase Capital Partners and affiliates of Soros Fund Management, will invest $100 million in India in 1998.
The money will be invested through the $100 million India Private Equity Fund. "We have already tied up for $50 million. We are currently in talks with companies in sectors like Financial Services, Software Product and Services, Engineering Services, Consumer Packaged Goods, packaging, pharmaceuticals and telecommunications," a source at the fund said.
The company has so far invested in $27.5 million in Gujarat Glass and $8 million in Leading Edge Systems. The fund is in talks with two software firms for an investment of $ 4.5 million and $8 million. However, details of the agreement are yet to be finalised.
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Indocean fund managers ensure that they play an active role in the functioning of the company. "The investment strategy is to focus on companies where the local market is expanding rapidly. We invest in those industries where the primary driver of growth is human capital," the source added.
While finding investors for investing in India is easier, it is not so easy to find good companies, he said. "Of the total 5000 companies listed on stock exchanges, only 300 are good investible companies. We invest in companies that have a clear focus. We are not only interested in investing in listed companies. Ideally, initial investment in a start up has to be through private equity. It can go public only when it carves a niche for itself," the source said.
He also said that stock indices in India lack adequate representation. "The indices in India do not give adequate representation to stocks that are actively traded. The market does not include stocks on the basis of the market capitalisation. For example, when the market sentiment about the rest of Asia was at a new low, it was an opportunity for India to capitalise on it. However, stock indices did not incorporate the growth of the infotech sector. We could have easily managed to raise more money than that was actually raised," he said.
Indocean is an affiliate of Chase Capital Partners. It is also supported by The Chatterjee Group, an affiliate of Soros Fund Management and by CIBC Oppenheimer. It currently manages $ 250 million funds for India.