PE investor looks beyond India

Due to the over-heating of the valuations of companies in India, private equity player Electra Partners is giving greater emphasis to investments in South East Asia, John Levack, managing director, Electra Partners Asia told reporters on the sidelines of annual general meeting of Zensar Technologies.

Electra has invested $150 million in Asia of which India has received over 50 per cent investments. Going forward, "We would emphasise on investments in South East Asian countries like Phillipines, Thailand and even consider China," said Levack.

The high valuations of companies in India, he said, "Is a temporary phenomenon, with too much money chasing too few good deals." The company's investment strategy is largely dependent on the risk versus rate of return.

Presently, "India follows Nasdaq and Tokyo in valuations," said Levack while explaining the need to focus on new markets.

The company has invested in two BPOs in Philippines already. "We would further look at investing in voice-based and transaction-based BPOs in Philippines as they have lower turnover rates and their accents are also better suited to service US-based customers. In Thailand it would look for skill-based organisations," said Levack.

Its China strategy, though, would be different, "We would look at companies where we can add value to the organisation as a partner, be it operational or for business growth," said Levak. Electra, till date, does not have a single investment in China as it considers the risks higher than the value of investment in China.

Levack is confident of the Indian growth story not being a bubble in spite of the higher company valuations as compared to even the Harshad Mehta, Ketan Parekh bull-run. "Even the rupee appreciation is not a deterrent for the Indian growth story which has changed from cost-based to high value skill-based value proposition for customers," said Levack.

Electra's investments in India include companies like Zensar Technologies and Moser Baer which are over a decade old. Other investments, some of which it has exited include Aksh Optifibre, Convansys and eTelecare Global Solutions.