Here’s some good news amid the havoc wreaked by the terrorists in Mumbai. Leading private equity firm Actis has closed a $2.9-billion private equity fund, of which about $1 billion is likely to be invested in Indian companies over the next four years.
Actis’ success bucks the trend among funds that have generally been finding it difficult to raise growth capital.
The Actis Emerging Markets 3 fund was targeting a corpus of $2.5 billion and managed to raise $400 million more. This indicates that global investors are confident about growth prospects in emerging economies such as India, Latin America, South East Asia and Africa.
“Actis has been a consistent private equity investor in India for more than 10 years. Over this period, Actis has worked with promoters and management teams to create value for their businesses. This fund-raising is an endorsement of our investment track record,” said Actis partner and South Asia head JM Trivedi.
Actis’ plan to invest $1 billion in India over the next three to four years will bring hope to many companies as the current liquidity crisis had restricted borrowing options for corporates, particularly those in the real estate sector. Also, with valuations coming off highs seen in the two-year equities boom, private equity funds are keen to invest. The broader Sensex has fallen 57% since its peak in July.
The UK-based private equity firm, which was spun off from CDC, was in the news recently after Nilgiri’s Dairy — where Actis has a controlling equity stake — sold its hospitality business as part of a strategy to exit non-core businesses.
The private equity firm was also among the first to introduce the concept of management buyouts in India when in 2005, it sold off the international trading business division of ICI India, which it had acquired earlier.
Actis’ $2.9-billion fund is one of the largest dedicated emerging market private equity funds to close this year and doubles the amount raised by the same firm in 2004.
The investors include a diversified group of 100 investors from across the world, including a number of first-time investors in emerging markets. An Actis statement says that the fund will be used to build a diversified portfolio of between 30 and 40 investments across China, India, Africa, Latin America and South East Asia, typically investing a minimum of $50 million of equity capital in buyout and growth transactions.
However, other private equity firms that compete with Actis say the fund-raising underlines how emerging market buyout groups are able to find money from investors, while US and Europe-oriented funds are finding it very difficult.
A number of private equity firms that have recently had year-ending meetings in the US have received strict directives to focus only on existing transactions and cut costs; there has been a significant slowdown in the number of deals too.
Tuesday, December 02, 2008
India's exports shrink for first time in 3 years
India's exports in October shrank an annual 12.1 percent, the first year on year decline in nearly three years, as slowing output at home and troubled economies in key overseas markets slashed demand.
Overseas sales in the month plunged to $12.82 billion from $14.59 billion in 2007, and analysts said tight credit conditions had added to the woes of exporters.
"Two things contributed to fall in exports -- one, the global slowdown, and second very tight credit conditions during the month," said D.K. Joshi, principal economist with domestic rating agency Crisil.
Economists predicted exports may fall short of 20 percent growth in the 2008/09 fiscal year, way below a target for the 12 months of 25 percent expansion.
Exports recorded their last contraction in November 2005, when they fell an annual 11.4 percent.
High borrowing costs and frozen credit as the global economic crisis spilled into Indian markets have slowed economic activity.
Growth in imports also eased sharply to 10.6 percent in October from a scorching 43.3 percent growth the month before as oil prices tumbled and industrial activity slowed.
Imports in October stood at $23.36 billion, helping the trade deficit narrow slightly to $10.54 billion in October compared with $10.63 billion in September, data showed on Monday.
Palaniappan Chidambaram, who on Sunday was shifted from the Finance Ministry to the internal security portfolio following the Mumbai attacks, said last week he was considering help for top export sectors, including textiles, vehicles and jewellery.
Exports during April to October were up 23.7 percent at $107.8 billion from a year earlier.
"The fall in export growth in October is an aberration which will correct in subsequent months. But we won't attain 20 percent plus growth for this fiscal year," added Crisil's Joshi.
Oil imports still rose 22 percent during the month from a year earlier to $7.96 billion despite a slump in crude prices from their July peaks.
For April-October, the trade deficit stood at $73 billion, much higher than $45.64 billion a year ago.
Overseas sales in the month plunged to $12.82 billion from $14.59 billion in 2007, and analysts said tight credit conditions had added to the woes of exporters.
"Two things contributed to fall in exports -- one, the global slowdown, and second very tight credit conditions during the month," said D.K. Joshi, principal economist with domestic rating agency Crisil.
Economists predicted exports may fall short of 20 percent growth in the 2008/09 fiscal year, way below a target for the 12 months of 25 percent expansion.
Exports recorded their last contraction in November 2005, when they fell an annual 11.4 percent.
High borrowing costs and frozen credit as the global economic crisis spilled into Indian markets have slowed economic activity.
Growth in imports also eased sharply to 10.6 percent in October from a scorching 43.3 percent growth the month before as oil prices tumbled and industrial activity slowed.
Imports in October stood at $23.36 billion, helping the trade deficit narrow slightly to $10.54 billion in October compared with $10.63 billion in September, data showed on Monday.
Palaniappan Chidambaram, who on Sunday was shifted from the Finance Ministry to the internal security portfolio following the Mumbai attacks, said last week he was considering help for top export sectors, including textiles, vehicles and jewellery.
Exports during April to October were up 23.7 percent at $107.8 billion from a year earlier.
"The fall in export growth in October is an aberration which will correct in subsequent months. But we won't attain 20 percent plus growth for this fiscal year," added Crisil's Joshi.
Oil imports still rose 22 percent during the month from a year earlier to $7.96 billion despite a slump in crude prices from their July peaks.
For April-October, the trade deficit stood at $73 billion, much higher than $45.64 billion a year ago.
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