Mumbai, Nov. 20: The face of venture capital investment in the country is changing. Private funds are now looking beyond merely providing seed capital and are investing in the entire life cycle of an enterprise. They are also widening their scope and eyeing a cross-section of industries, including retail, pharmaceuticals, outsourcing, auto components.
While investments by such funds in India are set to multiply over the next few years, experts note that new avenues are opening up for venture capitalists with modes like buyouts gaining in popularity.
Private funds could annually make investments of around $500 million for the next five years, feels Renuka Ramnath, managing director and CEO of ICICI Venture Funds Management. She sees emerging industries like retail, auto components, design, outsourcing and pharmaceuticals as the favourites of venture capitalists in the days ahead.
Indian private equity funds raised $1.5 billion up to June 2003 against $1.60 billion in the whole of 2002, showing signs of a pick-up, said Daniel Schwartz, chairman, Asian Venture Capital Journal.
He added that Indian funds raised about $4.1 billion in 2001 and made large investments in various enterprises in the IT and telecom sectors, but later the activity declined due to a variety of reasons that included the global economic slowdown, SARS and the war in Iraq.
However, the private equity corpus, which currently stands at $2.86 billion, will grow significantly in the coming years, he said. “The IT sector is being balanced by other areas,” he added.
Announcing a three-day ‘Asia Venture Forum: India’ to be held in Mumbai in December, Schwartz said financial services accounted for 34.3 per cent of the total private equity investments in 2002.