UK's CDC Group looks to invest $500 mn through private equity route in India

Last Updated: Sat, Nov 24, 2012 18:50 hrs

The CDC Group, a wholly-owned development finance institution of the UK government’s Department for International Development, is looking to invest around $500 million in India through the private equity route.

The fund, which has had good exposure in India through the fund-of-funds ((FoF) route, would now be parallelly looking to invest directly in Indian businesses.

A spokesperson for the CDC Group said that they were looking to invest $1 billion over the next four-five years in India and the split would be more or less equally distributed between the FoF route and direct investments in Indian companies.

“We have hired a senior private equity professional, Srinivasan Nagarajan, as our regional director in India, who will come on board next year. He will be involved in direct investments into Indian companies and also continue the relationship with the investment community in India,” the spokesperson told Business Standard.

The move to hire Nagarajan comes a few months after CDC’s Asia Managing director Anubha Shrivastava quit the company during early August. Nagarajan, however, is not a replacement for Anubha Shrivastava and CDC is expected to fill that position at the earliest.

CDC’s direct thrust in the Indian private equity sector is part of its recently-announced strategy through which it would provide debt and direct investment to businesses as well as acting as an FoF investor. CDC has net assets of £2.6 billion and invests in developing countries in South Asia and Africa.

CDC currently has capital at work in 152 funds managed by 80 fund managers. Some of the prominent PE funds which are active in India are Actis, New Silk Route, Ascent Capital, Baring Private Equity Partners, India Value Fund Advisors and Multiples Investment Advisors, among others. The spokesperson added that they would continue to work with various private equity funds and would not be competing with them, with CDC possibly be co-investing in some cases as well.

The push into India’s private equity industry by CDC comes at a time when many Indian and global PE funds are struggling to find investments and even if they have found some, it is proving to be difficult to find good exits.

Sanjeev Krishan, leader, private equity, at Pricewaterhouse-Coopers India said the third quarter of 2012 was an important period in which the investor community felt both despair and hope. “Some positive-sounding policy announcements towards the end of the quarter hopefully lifted investor confidence. While that may not result in heightened deal activity in the near term, it may bring the focus back on growth and create enough opportunities for equity investors in the future.

The Shome Committee recommendations have also been positively received by the investor community, and should the government continue to walk the talk, investor interest in India is bound to revive," he said.

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