INDIA BUSINESS WORLD - JULY 1st - JULY 31st - 2008
DUBAI PE FIRM BUYS 15% IN AVENDUS INDIA
EVEN as the equity market has fallen sharply in India, investors from the Gulf region seem to have kept their interest the country intact. Eastgate Capital Group, a Dubai-based private equity (PE) firm, is looking at raising an India-dedicated private equity fund of over $250 million. A host of firms from the region have been investing in India and other South Asian countries in the recent past.
The private equity firm has picked up around a 15% stake in Avendus Capital, a financial services firm from its Global Emerging Market Private Equity Fund. The firm has invested Rs 100 crore into the Indian company out of its $250 million fund, for which it will also get a board seat. Avendus will use the money for beefing up its business and strengthening its product portfolio.
The investment in Avendus is Eastgate’s first investment in the country. It has already invested around $90 million from its Emerging Market Fund. It is also looking at investments in South Korea, Russia and Pakistan from this fund.
Eastgate Capital Group is a private equity subsidiary of NCB Capital, the investment banking subsidiary of National Commercial Bank of Saudi Arabia, the country’s first bank.
Said Nasr-Eddine Benaissa, managing partner of Eastgate Capital Group: “We are looking at an India specific fund. The size of the fund is likely to be above $250 million.” The firm is likely to start work on the India fund next year. A host of private equity funds have been formed in the Middle East, as the region started getting flush with funds because of the oil boom. However, unlike before where these funds were investing in the US and Europe, the new funds have started in emerging markets like China, India, Africa, etc.
According to Rajiv Nakani, director, Eastgate Capital Group, most of the bigger Middle East groups, which have raised private equity funds, are looking at investing in India. These funds are investing in South Asia, Africa and the Middle East. The fund currently has a $800-million assets under management (AUM), which it plans to increase by at least 50% in the next six months, he added.
Mr Benaissa added, “Our major focus is in China, India and Russia. We are looking at the consumercentric sectors in the emerging markets-consumer goods, retail healthcare and also certain aspects of financial services. These sectors will benefit from the growth in the middle income segments of these economies and is also likely to be resilient from shocks.” He, however, added that given the current market conditions, it is not easy to raise funds. Major investors in the funds are the bigger families, institutions, pension funds and sovereign funds.
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