General Atlantic–the private equity firm with investments in technology companies such as Genpact, Patni and Hexaware–has decided to look beyond IT/ITES to chase themes such as domestic consumption and infrastructure in India.
General Atlantic, which has an investment exposure of close to $1 billion in India, will now look at infrastructure, hard and soft, and domestic consumption-led businesses. Till 2007, the fund had a clear bias towards IT/ITES investments.
In an interview to VCCircle, Abhay Havaldar, who leads the firm’s South East Asian investments, said, “earlier, we were into export-led businesses serving global demand with an Indian cost structure (IT, BPO and pharma outsourcing). Those businesses did very well when the exchange rates were unidirectional. This has become more volatile now. It took us some more time to figure out this whole domestic consumption and infrastructure piece because that is not an area where we have made significant investments in other parts of the world.”
In its first deal in three years, the PE fund recently announced its investment in infrastructure when it participated with a consortium that put $425 million in Asian Genco, a Singapore-based company with power generation assets in India and engineering services businesses.
The firm would look at India-specific themes rather than replicating the global General Atlantic model which doesn’t necessarily have exposure to such sectors. With the shift in strategy, the company also recently roped in Ranjit Pandit, former Mckinsey India chief, as managing director.
General Atlantic’s current portfolio is indeed technology-heavy. In 2002, the company invested $100 million in Patni Computer Systems Ltd (an application software company) followed by an undisclosed sum in Genpact in 2004. In 2005, it invested $25 million in Jubilant Life Sciences Ltd and $67.6 million in Hexaware Technologies Ltd (Data Processing & Outsourced Services ) in 2006. It has made an investment of $115 million in National Stock Exchange and undisclosed sums in Infotech Enterprises Ltd in 2007 and IBS Software Services Pvt. Ltd. GA recently pared some stake in Genpact.
So, what does this mean for the firm’s IT portfolio? Havaldar said, they look at companies in their individual capacity and do not make decisions based on a portfolio approach. Commenting on its significant portfolio company Patni Computer, Havaldar said, “Patni now has a strong management team and a board that is fully in charge. They have done a fairly good job in getting their efficiencies right in terms of margins and utilisation. They are now being more competitive in the market place.”