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“We are looking at five deals with a ticket size of $100 million per deal in our investment themes of manufacturing, telecom infrastructure, infrastructure, financial services and consumer oriented sectors,” Jacob Kurian, partner of New Silk Route told Financial Chronicle. However, when contacted, he refused to disclose the target companies.
The Asia-focused growth capital firm was founded in 2006 with over $1.4 billion under management. It focuses on the Indian subcontinent as well as other rapidly growing economies in Asia and the West Asia. The firm is led by Rajat Gupta, former McKinsey chief, Victor Menezes, Parag Saxena and Hafeez Shaikh.
The firm has received commitments of $1.4 billion for its first fund New Silk Route PE Asia Fund LP. While the fund has a strong focus on India, about a third of the fund would be allocated for other regions like Pakistan, Bangladesh, Sri Lanka, as well as the West and East Asia.
In India, the private equity firm has so far done 10 deals worth $350 million. The major investments include Reliance Infratel, Aster Infrastructure, INX Media and KS Oils.
“After the market raise, valuation has become an issue especially in unlisted firms. The promoters treat them an on par with listed firms and demand unreasonable valuations, which is causing a lag in private equity deal closures,” Jacob said.
For example, NSR has studied 650 companies, but so far only closed 10 deals and valuations was a major concern in most cases, he added.
For the first nine months of this year, private equity players have done 46 deals worth $201 million, sharply below 124 deals worth $709 million in the same period last year, according to Chennai-based Venture Intelligence. Jacob added that the firm is also looking to do a few successful exits as well.
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What is interesting to note
What is interesting to note is that the promoters who have sold their businesses to quite a few PE's are very happy while some of the PE's are having sleepless nights. It is true that a few PE's employ senior people who make investment decisions without having the hands on ability to run the business. In such a scenario when the investee business faces turbulence, there is very little the PE firm can do except be at the mercy of the promoters.
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