PE, VC investments to touch $75 bn by 2015: Grant Thornton

PE funds had crossed $50 billion over the last six years

Private equity (PE) and venture capital (VC) investments, which are major contributors in development of several sectors in the country, are likely to touch $70-75 billion till 2015, leading audit and advisory firm Grant Thornton said.

“We expect $70-75 billion of PE and VC investments in India during 2010-2015,” Sudhir Sethi, founder, chairman and managing director, IDG Ventures India and member of IVCA Executive Committee and Research and Data Sub Com told reporters after the launch of 'The Fourth Wheel'.

'The Fourth Wheel' is a report on PE and Venture Capital (VC) in India, jointly prepared by Grant Thornton and India Venture Capital Association (IVCA).

Grant Thornton India Partner, leadership team, Harish HV said PE funds had now crossed $50 billion over the last six years and 2010 alone saw $6 billion fund flow.

"This year [calender year] the PE fund flow is likely to be around $10-11 billion as India provides huge opportunity compared to other emerging nations," Harish said.

A lot more money is waiting for investment and India provides highest growth rate at 7-8%, mainly in sectors like financial services, infrastructure and domestic consumption, he said.

This positive fund flow indicates that PE and VC funds will be the fourth wheel, which is moving rapidly, and have thus become the major contributors to the Indian economy and the wealth creation, he said.

This class has created substantial wealth for the industry and there is a need for easier policy framework and relaxation in investment regime, Harish pointed out.

Talking about exit, he said, it is likely to be a challenge and there are likely to be more strategic exits, mergers and acquisitions between PE-backed companies and secondary transactions between PE houses, as the major avenues for exit and initial public offering (IPO), as an option, may diminish till there is a separate mid-market platform.

"The usual period for PE exits in India is about 4-6 years and in 2011 there may be on an average 20-30% of exits," he said.


High inflationary regime not acceptable: FM

Finance minister Pranab Mukherjee, however, expressed satisfaction that inflation in overall primary articles came down during the week

New Delhi: Attributing the latest jump in food inflation mainly to rising prices of protein-based items, finance minister Pranab Mukherjee today said the high inflationary regime was not acceptable and efforts would be made to bring it down, reports PTI.

“... We are in region of high inflationary regime which is not acceptable. It will have to be brought down,” Mr Mukherjee told reporters here while commenting on food inflation, which touched two-and-half month high of 9.13% for the week ended 11th June.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8.96% during the previous week. It was almost 23% during the second week of June 2010.

“Detailed analysis of food items indicate that it is substantially contributed by the milk products, poultry products, fish and certain other items,” Mr Mukherjee said.

The minister, however, expressed satisfaction that inflation in overall primary articles came down during the week.

“On the whole, the figures are not satisfactory... but not disappointing in the sense that the WPI primary articles have come down from 12.86% to 12.62%,” the finance minister said, adding that cereal prices have also moderated during the week.

Primary articles have a share of over 20% in the overall WPI basket.

Referring to the non-food items, Mr Mukherjee said they have “been steadily declining from 23.82% just a month back... every subsequent week from 7th May to 11th June it has steadily declined. That is one important aspect.”

As per the WPI data, inflation in non-food primary articles declined from 23.82% for the week ended 7th May to 18.43% during the reporting week.

Fruits and milk became dearer by 28.66% and 15.30%, respectively, during the week ended 11th June. The other items which became more expensive during the week were onions (11.89%), eggs, meat and fish (10.56%), cereals (4.32%) and potatoes (0.71%).

However, prices of pulses, wheat and vegetables went down during the week. While pulses became 10.34% cheaper, wheat was down 1% and vegetables 9.27%.

Overall, primary articles reported inflation of 12.62% during the period under review, down from 12.86% in the previous week.

Meanwhile, inflation of non-food primary articles stood at 18.43% for the week ended 11th June as against 20.20% during the previous week.

Fibres grew more expensive by 43.77% and minerals by 25.90%. Fuel and power became dearer by 12.84% and petrol was up 33.23% year-on-year.


IRDA reviewing bancassurance model of selling policies

IRDA member RK Nair stated that there have been instances of banks having resorted to forced selling of policies while advancing loans to customers. “Selling should be need-based and not forced,” he added

Kolkata: The Insurance Regulatory and Development Authority (IRDA) has started reviewing the bancassurance model of insurance penetration as there have been a few instances of mis-selling of policies by banks, reports PTI.

“A panel was set up by the IRDA to look into the bancassurance model. The panel has already submitted its report,” IRDA member (F&I) RK Nair said.

Mr Nair said that some banks had resorted to forced selling of policies while advancing loans to customers.

Typically, the policies get lapsed due to non-continuance by the customer after the first premium is paid, leading to forfeiture of the money by the insurance company, Mr Nair said at the Indian Chamber of Commerce here today.

He said that IRDA was concerned over the practice, for which a panel had been set up.

“Selling should be need-based and not forced,” he said. Mr Nair said better regulatory practices were needed to deal with lapse cases.

On the initial public offer (IPO) guidelines for non-life insurance companies, he said the rules would be similar to those for life companies, but disclosures would be different.

“The nature of disclosures are under finalisation,” he added.


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