Private equity pushes into India, Africa.

• Author: Marshall, Jeffrey
• Position: EMERGING MARKETS

Private equity is global these days, and one of its chief beneficiaries is India. But even Africa, long deemed an unhappy backwater for investment apart from a few more developed nations, is being targeted.

Research conducted by global research and analytics firm Evalueserve shows that if current trends continue, India will have received $13.5 billion in private equity (PE) funding in 2007, ranking it among the top seven countries in the world.

Moreover, forecasts show this funding could balloon to almost $20 billion by 2010--a thousand-fold increase from the $20 million invested in 1996.

In its newly released report, An Indispensable Guide to Equity Investment in India, Evalueserve claims there are more than 366 investment-related firms operating in India, and another 69 have raised--or are raising--funds and are planning to start operations soon. In total, these PE firms seem to have amassed $48 billion earmarked for investment in India between July 2007 and December 2010.

Beyond the tech-heavy activity that has driven much of the earlier investment opportunities, there are many new areas that private equity and venture capital firms are now aggressively looking to invest in, the research firm says. These include manufacturing, financial services, healthcare, real estate and construction.

However, Evalueserve cautions that a solid understanding of the Indian market and some behavioral adjustments will be required from investors new to India in order to maximize returns. Solid research, subtle and savvy managerial skills and a healthy dose of patience are also part of the recipe for success.

Evalueserve urges private investors to cherry-pick successful companies in the BSE-100 and BSE-500 (Bombay Stock Exchange) indexes. The Indian government will open the banking sector to competition, it says, and liberalize other sectors like...