Venturing Out

In September, ICICI Venture sealed one of the biggest deals in the media and publishing industry when it acquired Tata Infomedia for Rs 141 crore. And the biggest investment this year so far has been a 50 million one by Warburg Pincus in Radhakrishna Foodland.

Says Pradip P Shah, chairman,IndAsia Fund Advisors, 8220;Private equity and venture funding is now starting to come of age in India. In the next two years, you could see some really big deals in the non-technology sector, and soon funds could be routed into nearly every major sector. For instance, companies that are going to be privatised and nationalised banks would be targets. The investor outlook on India is so strong that private equity won8217;t restrict itself to technology.8221;

Some of this has already started playing out. In July this year, private equity investor CDC Capital picked up the Punjab government8217;s 23.5 per cent stake in Punjab Tractors.

However, one of the most unconventional areas VCs have started moving into is the entertainment industry, specifically Bollywood. Infinity Ventures chairman Saurabh Srivastava has recently made the plunge as an angel investor. According to Srivastava, 8220;As far as Bollywood goes, most investments will be in companies with a corporatised structure, like, say, Mukta Arts. Bollywood is still very much an individual producer game, but if things get streamlined in a structured manner, I see investment flowing there too.8221; Srivastava has picked up a minority stake in Bobby Bedi8217;s Kaleidoscope, which first achieved commercial success with the movie Bandit Queen. Investments in individual film projects will take some time to pick up pace, but VCs have already got involved in the distribution and exhibition side.

Some time ago, New York-based private equity investor GW Capital became a significant investor in Mumbai8217;s Shringar Films, which has activities in distribution as well as multiplexes. Of late multiplexes combined with retail outlets has also been a draw. ICICI Venture has been an early entrant retail investing, with investments in companies like Pantaloons. According to GW Capital8217;s Vishal Nivatia, the fund8217;s focus from the very beginning has been non-technology sectors. 8220;Our four areas of interest are media 038; entertainment, healthcare, retail and outsourcing activities. Our investment in Shringar Films is a reflection of opportunities on the distributing and exhibition side, the last of which also includes multiplexes, malls etc.8221; As far as healthcare goes, the fund invested in Quality Care, a super speciality hospital chain based out of Hyderabad in 2001. It8217;s only tech-related investments has been in the BPO space, where it has put money into Epicentre.

8220;We see a lot of promise in retailing and supply chain management. As companies streamline their operations, the need for independent retailing and supply chain management firms is bound to increase. As far as Bollywood goes, the business is still fragmented, though there are signs of a slow move towards corporatisation,8221; says Nivatia. 8220;If we can identify a right business model, we could also be looking at film production.8221;