London-based private equity firm Greater Pacific Capital is planning to launch a $750m fund to invest equally in China and India, reports India's Business Standard.

greaterpacific.jpgThe fund, to be launched next year, is looking at a wide range sectors such as alternate energy, precision tooling, robotics, clinical research, speciality retail and pharma.

The firm argues that conditions for investing in growth companies are better than ever, as valuations of companies have come down and many are struggling to borrow from banks and financial institutions, so effectively have little choice but to take PE money.

Its a somewhat counter-intuitive argument as the climate for PE investment in the west has changed dramatically: the number of deals has plummeted, exit opportunities have largely dried up and investors risk aversion has increased.

But despite the credit crunch, opportunities continue to abound in emerging markets like China for those prepared to take a long-term view, or so argues this Knowledge@Wharton article. While the blockbuster buyouts that characterised the recent PE boom in the West are now a thing of the past, China and India are awash with small innovative companies desperate for investment to grow their businesses.

Of course the big question is whether western PE firms still have the stomach to invest so far away from home.

Greater Pacific Capital apparently does, although the credit crunch has stalled the launch of its new fund from Q2 2009 to 2010.

The company, which started operations in 2005, currently runs a $245m fund, 80% of which has already been invested in Indian and Chinese companies.

Technorati : , , ,

email