Investors need to be compensated for additional risk

Leading private equity firm Trident Capital is bullish on the Indian market. The company plans to raise $350 million in its seventh round of funding is looking at attractive opportunities in the country. In an exclusive interview with

R Ravichandran of the FE, Venetia Kontogouris, Senior MD, Trident Capital, said there were still many regulatory and legal challenges to doing business in India, but that is part of the overall investment consideration, which has to be weighed against potential returns. Excerpts:

Please give us a perspective on private equity/ venture capital industry in India and its growth prospects?

We are very positive on the opportunities for investment in India. India is one of the few economies in the world that is actually experiencing strong growth.

What are trends in VC/PE funding ? in India and the US?

There are major challenges to the way traditional VC/PE investments have been made both in the US and internationally. The lack of IPI opportunities has made investing more of a challenge as this greatly limits liquidity opportunities.

Developments in cloud computing and internet connectivity have created new opportunities for radical new business models, requiring that VC/PE firms rethink their traditional investment approach. Less capital is required for start-ups in these areas, and therefore smaller funds will be raised.

How does India rank among the developing countries in attracting PEs/VCs?

There are still many regulatory and legal challenges to doing business in India, but that is part of the overall investment consideration, which has to be weighed against potential returns.

In other words, investors will need to be compensated for taking on the additional risk and regulatory challenges.

What is your view on return on investments from the sector?

The limited liquidity and M&A activity in the Indian market has been an impediment to realising VC returns. As markets improve in India, this should improve in the future. India is also not immune to the overall decline in economic growth around the world.

Tell us about Trident?s investment plans for India for this fiscal. What will you focus on?

We continue to look for interesting opportunities across our targeted investment areas. We look to invest in technology, internet, software, business services over the next few months.

Trident has invested over $40 million in India. We are in the process of raising their Trident fund VII, with a target of $350 million.

Can you give an update on Trident?s portfolio companies in India ?

We are making progress in several of our portfolio companies including Minglebox, in the education space, OPI in the F&A outsourcing space, Microland, in The domestic and foreign network infrastructure management space, Neilsoft, in engineering outsourcing and finally, Elucido in the digital display management space.

Are there any fund raising plans for Indian investment?

No, although we are close to finalising our fund VII, which will be open to attractive opportunities in India.