India-focused private equity/ venture capital funds have been able to raise close to $3 billion during the first six-months of the current calendar, according to data from Venture Intelligence, a VC research firm.
Blue-chip names such as Bessemer Venture Partners, Google, JP Morgan Asset Management are taking strategic bets in the Indian market.
According to an industry analyst: "The strong flow of funds from global institutions is a definite indication that they are happy with the returns being offered by investing in Indian companies."
While JP Morgan Asset Management has earmarked $360 million to invest in India, Sun-Apollo has $630 million. Bessemer, a century old Silicon Valley-based venture capital firm, recently announced that it has closed a $1 billion global fund of which $350 million will be for India.
"India has been an exciting investment opportunity for us," said Rob Chandra, a Managing Partner at Bessemer. "Just as we saw the long term opportunity when we went to Silicon Valley in the 1970s, we see a similar opportunity in India driven by the growth in middle class prosperity and innovation. We have an exceptionally experienced and highly dedicated team on the ground in India who is helping us build a great investment practice by combining local expertise with a great global investment platform."
The hunger is not just from corporate behemoths. High networth family funds, universities such as Stanford, Yale, US pension funds are all aggressively turning Limited Partners and are investing in funds with a focus on India.
Another classic example of fund raising is that of IL&FS Investment Managers, a private equity firm floated by IL&FS.
During 2006, this fund invested around $150 million and in turn is about to close a $400 million fund within an year's time. "Most of our investors have come back to invest in our next fund," a source in IL&FS said.
While such examples of large global funds increasing their exposure in India are growing, instances of active support to seed-stage fund is also on the rise. Google, for example, has made three such investments in India focused funds which are looking at investing in early-stage companies.
The search giant has take up exposures in SeedFund, Erasmic Fund and the recent one has been in VentureEast TeNet Fund, in which TeNet Group of IIT-Chennai is an advisor.
In July-December 2006, India-focused PE funds raised over $4 billion.
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