Sunday, June 25, 2006
Posted by Vijaychandran Veerachandran at 5:51 PM
I dont think this is what all it is. But I know many people who think in the same way. I totally disagree with this definition any way
VC model defined
The VC model can be defined as:
a business model based on other people's money and labour utilising an asymmetric power position in respect to entrepreneurs.
Posted by Vijaychandran Veerachandran at 9:26 AM
Saturday, June 24, 2006
The DLF management and the company's merchant bankers are believed to have pruned the stratospheric valuation of the company from about $25 billion to $15-$18 billion. The number of shares proposed to be issued, about 202 million, remains the same, but the amount sought to be raised, about $3.1 billion, may be cut to about $1.6 billion. Also, there is a possibility that the issue may be delayed.
It's wait-and-watch time for IPOs- The Economic Times
Posted by Vijaychandran Veerachandran at 2:16 PM
Friday, June 23, 2006
"The traditional image of the some of the world’s wealthiest, also referred to as the ultra-affluent — mostly first generation entrepreneurs with net worth of $50-100 million or more — is changing. Better access to financial data is turning them into sophisticated wealth creators who’re more global in their outlook to investing." Read more. Wise Investing:
My comment on the article
Posted by Vijaychandran Veerachandran at 12:47 PM
Wednesday, June 21, 2006
This is a jinxed deal. Jet Airways is likely to call off its proposed Rs 2,300 crore acquisition of Air Sahara if it does not get security clearance from the government by Wednesday. Earlier also, it seemed Jet was backing out of the deal
Greed of utmost important . Deals are necessary moeny flow is more important. Thriving economy cant boost with out having more and more market consolidation and more major players coming in to picture. Companies are made for merger and diversification.
Let customer realize more power and benefit of choice. Read US airline stories. The money u spend on a decent meal is good enough for flying .
Sad to hear but India has to grow.
ps: The opinion is totally mine.
Posted by Vijaychandran Veerachandran at 11:08 AM
Tuesday, June 20, 2006
I will comment on this article as long as I find some free time. Please read the article , More thoughts on this is welcome in comments.
The new mantra for PE in India by Sri Rajan, Ashish Singh and Hugh MacArthur
Updated 05:36 PM EST, Jun-16-2006
India beckons private equity investors as a land of beguiling opportunity wrapped in mind-boggling complexity.
Today, more than 30 funds totaling $4 billion are scouring the country for deals — and landing some big ones. In April, for example, Kohlberg Kravis Roberts & Co., the pioneer of buyouts, announced its Indian debut, paying $900 million for an 85% stake in an Indian software developer. Other prominent newcomers include Blackstone Group LP, which has earmarked $1 billion for Indian acquisitions, and Carlyle Group, which has created three Asian funds totaling $1 billion and opened a Mumbai office in late 2005.
These arrivals are joining a cadre of homegrown firms, such as UTI Venture Funds, ICICI Venture and ChrysCapital, for one simple reason: While representing only a small portion of Asia's more than $100 billion in private equity capital, India's growth trajectory is the region's steepest, increasing at a 51% compounded annual rate since 1998. Using the benchmark of deal value as a percentage of gross domestic product, Bain & Co. estimates that India's private equity market has the potential to expand fourfold.
But while the economics are elementary, the task is not. Indeed, for all of the new capital and energy flowing into India, new deal activity actually went dormant in late 2005. The chief reason: The Bombay Stock Exchange — India's leading public equities market — nearly doubled during a 12-month period. Although they have recently fallen off their recent highs, elevated stock prices have driven up the value of potential target companies.
Another complicating factor has been government rules. Indian regulators cap the amount of debt foreign private equity investors can use to finance their acquisitions. Instead of taking a controlling stake in a target company with just a sliver of equity that helps boost their leveraged returns, non-Indian private equity acquirers must typically commit 75% to 90% of the purchase price from their own capital.
With so much capital chasing a limited number of high-quality companies, smart private equity firms are taking pains to differentiate themselves. They begin by nurturing relationships with local enterprises, then offering a proposition that goes beyond just capital infusions to include knowledge of global markets and access to deep management expertise. Our analysis shows that successful investors are navigating this enormously complex market by honing four skills:
1) Choose wisely. Private equity players have always started with a clear thesis of how value is created. In India today, there are three particularly promising investment hypotheses. The first involves capitalizing on the underpinnings of the global outsourcing phenomenon: India's talented, low-cost labor force in software applications development, business services, engineering and technical design. The second targets those dynamic new sectors benefiting from the rise of a consumer class, including for-profit healthcare, real estate, and retail banking and credit. The last recognizes that selected industry niches — pharmaceuticals, automotive components and metal forging — are becoming globally competitive players.
General Atlantic LLC and Oak Hill Capital Partners took a stake in India's global back office in 2004 by paying $500 million for a 60% stake in General Electric Capital International Services, or Gecis. General Electric Co. established Gecis in 1997 as a captive offshore business and technology center, and it blossomed into a 17,000-employee unit serving nearly 1,000 GE operations worldwide. The deal allowed GE to continue to outsource its IT and business processes to Gecis, while harvesting the value it had built in the company. The new private equity owners quickly marketed its services to companies wanting a state-of-the-art service provider in India, but reluctant to entrust sensitive data to a captive GE unit. Since acquiring Gecis (now renamed Genpact), the new owners have locked in contracts with non-GE clients and made the company India's largest business process outsourcer.
2) Exercise quiet influence. Among the 25 largest deals in 2005, some 80% were made to acquire minority stakes in publicly traded companies. Here, private equity investors have limited ability to influence the way the companies in which they've invested are managed.
Smart private equity fund managers find ways to add value unobtrusively. Even when they lack effective control, fund managers put their know-how and range of contacts to use with quiet authority, as was the case with Baring Private Equity Partners, the London-based buyout firm. Shortly after Baring India acquired a stake in Jyothy Laboratories Ltd., a Mumbai-based manufacturer and distributor of consumer products, the firm introduced Jyothy management to outside advisers to evaluate the company's high advertising expenditures. The experts found that, while Jyothy's use of national media was efficient, the company wasn't able to reach its potential market through existing sales channels. These Baring-inspired insights enabled Jyothy to extend its distribution network, significantly boosting sales and profits.
3) Bet on the right people. Assembling the right management team has always been key to success for private equity funds. But because India's economy is largely being built by closely held family businesses, minority private equity investors have less scope to hire and fire. That's why funds are maneuvering to forge partnerships with experienced Indian entrepreneurs and managers who know how to navigate fast-changing markets.
Warburg Pincus found both a world-class opportunity and managers with the skill to seize it at Radhakrishna Group, a privately held food distribution and logistics services company headquartered near Mumbai. It began by betting on Chairman Raju Sheté, who had managed Radhakrishna's growth from a startup provisioning ships into India's largest food conglomerate, with interests in supermarkets, catering and fast-food franchising. Investing $50 million for a 25% stake in Radhakrishna in mid-2003, Warburg Pincus is working with Sheté to implement a farm-to-plate reorganization of the country's food-supply chain. The aim: to overcome the fragmentation and public health barriers hampering India's development of a modern food-processing and distribution system. The private equity partners are also collaborating with Sheté and his team to expand Radhakrishna's commercial food service and distribution network into southern Africa and the Middle East.
4) Stay nimble. U.S.-based PE firms usually think in terms of a three- to five-year holding period for the companies in their portfolios. But the Asian currency crisis in 1997 and any number of local financial rumbles have proved that the markets seldom let investors choose when to sell. Shrewd fund managers will anticipate sharp market swings and formulate flexible exit strategies.
Baring recently discovered the importance of patience when it was forced to postpone a plan to sell off a 35% stake it had in Mphasis BFL Ltd., a business process outsourcing firm it purchased in 1998. However, Mphasis was forced to lower its earnings forecast in 2004, weakening interest among prospective buyers and jeopardizing Baring's goal of selling its stake within four to seven years. Baring and Mphasis remained confident that revenues and earnings would increase 25% and 30%, respectively, in 2005 and 2006, and held on. In early June, Baring sold its Mphasis stake to Electronic Data Systems Corp., the information technology services firm, for a handsome $255 million — more than 25 times its original investment.
No single key will unlock success in India's complex economy. Private equity investors will need yoga-like flexibility to prevail. But buyout firms that learn to exercise the disciplines of building relationships, spotting emergent opportunities, quietly influencing outcomes and betting on the right human capital will be those best able to reap the rewards of a market where East and West are meeting for mutual benefit. n
Sri Rajan is a partner with Bain & Co. and leads the firm's private equity practice in India. Ashish Singh is a Bain partner and leads the firm's New Delhi office. Bain partner Hugh MacArthur, a partner in the firm's Boston office, leads Bain's global private equity practice.
Posted by Vijaychandran Veerachandran at 7:46 AM
Kleiner Perkins' 7 rules (plus one) for software startups. Hitting more of these is better:
* Instant Value to customers - solve a problem or create value with the first use
* Viral adoption - Pull, not push. No direct sales force required
* Minimum IT footprint, preferably none. Hosted SaaS is best.
* Simple, intuitive user experience - no training required.
* Personalized user experience - customizable
* Easy configuration based on application or usage templates
* Context aware - adjust to location, groups, preferences, devices, etc.
And one more (from me):
* It helps if you're getting your funding from KP
Thanks Mr Paul
Posted by Vijaychandran Veerachandran at 4:36 AM
Monday, June 19, 2006
WSJ.com - India Draws U.S. Financiers: "India Draws U.S. Financiers
Venture Capitalists Invest Directly
In the Nation's High-Tech Firms
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
December 7, 2005
Venture capitalists have recently encouraged high-technology start-ups to set up offices in India, where they can hire low-cost engineers and outsource basic programming tasks. Now some of those financiers are taking a different tack: investing directly in Indian high-tech companies.
The trend, still in its early stages, shows how India is slowly moving up the high-tech food chain. It is a development already seen in China, where U.S. venture capitalists have poured hundreds of millions of dollars into start-up companies that are tapping a tech-savvy middle class -- despite the hassles of managing investments thousands of miles from home.
Now India is moving on the same path.
[Wipro employees undergo training to provide services to overseas clients, in Bangalore, India.]
Wipro employees undergo training to provide services to overseas clients, in Bangalore, India.
'We see ourselves making more direct investments there,' says Promod Haque, a managing partner with Norwest Venture Partners in Palo Alto, Calif. Today, Norwest is expected to announce its first financing of an Indian-based company: a $13.8 million investment i"
Posted by Vijaychandran Veerachandran at 6:48 AM
Tuesday, June 13, 2006
Monday, June 12, 2006
Friday, June 02, 2006
Thursday, June 01, 2006
Increasing dependence of Asian Markets. I have some comments on investing in Asian and more or less we can predict the downfall of Asian markets its interesting what you need is to buy and sell shares overnight. If you cant understand what I am talking read below. Still dont shoot me a mail : Vijay Chandran
"The Japanese and Indian stock markets took a battering amid concerns stemming from rising U.S. interest rates. The Tokyo market fell 2.5% to close at a three-month low, while Indian shares sank 3.6%. The declines -- in two countries enjoying healthy growth and strong corporate profits -- show the sensitivity of Asian markets to expectations about U.S. rates and their effects on American consumers and investors.
Last month, the U.S. Federal Reserve raised rates by a quarter of a percentage point for the 16th consecutive meeting, lifting the federal-funds rate to 5%. At the time, the Federal Open Market Committee said 'some further policy firming may yet be needed to address inflation risks." WSJ.com - Japan, India Take a Beating:
Posted by Vijaychandran Veerachandran at 10:44 AM
Barron's: You've been right on the price of gold all the way up.
Turk: The theme has been correct. There are problems with the dollar, and that's being reflected in a higher gold price. So, truth be told, it's not that gold is going higher -- it's that the dollar is going lower. An ounce of gold still purchases as much crude oil, essentially as it did 50 years ago, but that can't be said about dollars.
One of your gold indicators, the "fear index," is based on M-3 numbers, but the government has stopped reporting M-3.
Posted by Vijaychandran Veerachandran at 10:04 AM