The Carlyle Group plans to invest $125 million in India over the next 3-5 years. The venerable private equity investor has floated a $300-million Asia-focused fund, of which around 40% will be invested in India-driven companies.
Carlyle has till date invested around $25 million in India in various ventures like Usha Communications, SSKI, which owns the portal Sharekhan, and Educom.
The $125 million investment will exclusively be in IT and IT-enabled services. Said a Carlyle official, “It’s not that we are not interested in other sectors, but the mandate of our fund has a clear focus on technology.”
The official also added that the fund would also be cautious about investing in the telecom sector, though it didn’t rule out that option.
“Though fewer deals were signed this year, they were big in size,” said one VC.
VCs also argued that while most venture capital investment was coming in areas like IT and IT-enabled services, the potential of sectors like retail and media entertainment for attracting VC funding was quite high too. Said Reliance Entertainment’s Amit Khanna, “Around $200 million worth of private equity have already been invested in the media and entertainment sector, and $100 million of such funding is expected over the next couple of years.” This year’s hit movie Saathiya was produced by a VC-funded company called Kaleidoscope Entertainment.
Venture capitalists also felt that given the current economic scenario, it was deemed safer to invest in mature companies in expansion stage, rather than startups. While the rate of return on startups was often 10 times of investment, that of expansion stage companies were around 5 times of investment. However, mature companies obviously had a lower risk profile.
As far as Carlyle is concerned, the group had last year done the final closure of a $600 million venture capital fund, Carlyle Venture Partners II LP in the US. The fund was the largest venture capital fund raised in 2002, according to VentureWire, an industry tracker. Earlier in the US, Prism Venture Partners raised a fund of $421 million and Centennial Ventures of Denver closed a $341 million fund. Carlyle group first raised $210 million in 1997.