5 sectors to attract $8.5 b investment
SOURCE: The Hindu
DATE: August 5th, 2008
Mohit Soapbox:
I see the areas around logistics, media, education, infrastructure continue to attract foreign capital and the reality is that the growth within these areas will not happen without foreign capital and PE firms. I still have my doubts around the biotechnology and life sciences which will see an inflow but will be limited by lack of norms, IP and skill set in India. Clean technology is a need within the country and so is infrastructure and will need the right public-private partnership for these investments to work within the country. The model for education we see in the country require less dollars and more innovation and entrepreneurship to make it work in the context of the geographically diverse, economically disparate country.
ARTICLE
Venture capitalists (VCs) and private equities (PEs) are expected to invest over $8.5 billion in India in the next five years in at least five identified areas such as biotechnology and life sciences, logistics, clean technology, film production and education.
Making the projection, a joint Assocham and Deloitte paper, “Indian venture capital — a future scenario”, reveals that VCs and PEs, which, for long, have been choosing IT for investment purposes, have found huge investment opportunities in the five listed areas as regulatory regime in them is gradually disappearing.
Commenting on the findings, Assocham President Sajjan Jindal said that India had large opportunities in biotechnology and life sciences on the lines of retail and real estate. This sector has been attracting specialist venture capitalists from global and domestic funds.
The U.S. based Life Sciences Fund has recently invested about $20 million in a Hyderabad-based pharmaceutical company. Devices and diagnostics are other areas where investors are active.
It is anticipated that biotechnology and life sciences alone will attract about $1.5 billion investments from VCs and PEs by 2012.
Mr. Jindal said that logistics was another area in which VCs were expected to invest in excess of $2 billion in India’s maritime infrastructure and logistics as it strengthens cargo handling facilities to meet rising demand for exports and imports.
These funds are also looking at possibilities in ancillary businesses that support maritime trade such as warehousing and container freight stations.
Clean technology is still another area where VCs and PEs would grow more and more active. In 2007, investors committed $290 million in 11 clean tech investment deals compared to $140 million in nine deals in 2006.
The other prospective areas include film production and education.
With the newly accorded status of industry and professionalism on film industry, it will emerge as the new venue for VCs.
A global private equity firm, with $36 billion in assets, is planning about $200 million investments in the Indian education sector by taking up strategic positions in companies offering e-learning, distant learning, vocational training and the like, says the paper.
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