CLSA to increase PE investments by 67%

PRIVATE EQUITY WATCH

CLSA, the Asian securities unit of France's Credit Agricole, plans to increase private equity investments in the continent by 67 per cent as it seeks buy-out opportunities in India and China.

CLSA will raise private equity investments to $3 billion by the end of 2008, from $1.8 billion, Rob Morrison, chairman of CLSA, said today in an interview in Gurgaon, near New Delhi. A substantial portion of this could be invested in India, he said.

Private equity and venture investments in India almost doubled to $5.55 billion in the first half of this year, according to the Chennai-based Venture Intelligence, which tracks such deals. It expects investments to cross $10 billion by end of the year.

"The investment opportunities in India are huge,'' Morrison said. "The country needs big investments in power, roads and other utilities.''

Blackstone Group, JPMorgan Chase and 3i are investing in infrastructure projects in India to create ports, roads and power generating units, which will require $500 billion of funding by 2012, according to Finance Minister Palaniappan Chidambaram.

CLSA, which gets about 10 per cent of its revenues from India, its fourth-largest market, plans to expand the investment banking business in the country by doubling employees to eight and renewing a two-year contract with State Bank of India, the country's largest lender.

"We are trying to strengthen the relationship,'' Morrison said. "We are very comfortable with them (SBI) as they have a wider and broader reach than anybody else.''

Investment Banking
State Bank and CLSA last year agreed to jointly pitch for investment banking mandates to benefit from corporate fund raising plans and increasing mergers and acquisitions.

Global banks facing losses because of sub-prime writedowns may cut their expansion plans in the region and that could be an opportunity for CLSA, he said.

Morrison, who was in Gurgaon to open the 10th CLSA India investor conference, which has drawn more than 125 global investors and 70 companies, said CLSA would not pay a steep price to increase its investment banking business.

"We will try and leverage the brand value,'' Morrison said. "If the asking price is high, we'll say thank you, good luck.''