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Srivastava predicts more deals next yr.

THERE is one candid confession that the country's most celebrated venture capitalist Saurabh Srivastava isn't shy of making and that is despite all analysts' projections on the booming economy the best of businesses were caught completely unaware by the intense economic meltdown.

Says Srivastava, chairman- emeritus, The Indus Entrepreneurs ( TiE), " Now, as a face- saver exercise, I will not say that I saw it coming but the fact is that there was very little inkling about the intensity of the economic meltdown.

Now, after a year, I see things improving and there will be more action particularly on the deals side in 2010." As the most severe phase of recession comes to an end, the venture capital/ private equity ( VC/ PE) interest in non- IT sectors is at an all- time high and areas such as education, healthcare, retail, infrastructure and media are high on the radar.

Srivastava adds, " The flow of investments is now on areas that are recession- proof.

Consider the education sector. This has never been hit by meltdown. People invest in education at all times and in India, the personal spending on education surpasses all expenses. Hence, VCs see a good return from this sector. I am looking at investments in this segment. The returns can be as high as 30 per cent over a four to five- year period. Infrastructure, retail, media healthcare are others areas that offer investment opportunities during recession." Although new sectors are fast catching up in terms of investments, the all time VC/ PE favourites are IT and telecom. " The investments in IT space will still be robust in the coming years. The growth figures for the IT sector have blinked for the time being but in the long term, the sector will maintain a growth of 30 per cent," says Srivastava.

Srivastava's faith in the strong growth of the IT sector is founded by his own experience when he founded IIS Infotech in 1989 and built it into one of India's top 20 companies within four years. IIS was later

merged with a publicly traded British company to form Xansa. Till 2006, Srivastava led Xansa's operations as executive chairman.

Going by his business principles of investing in an agile company, Srivastava says he picks on companies on a few parameters -- the business should be able to address a large space, the entrepreneurs should be clear about the offering and the model should be clear on taking competition and the team should have people who believe in making a difference.

Most of these principles were followed by Srivastava when he became one of the three founding general partners of Infinity Captial India in 2000. So far, the fund has invested in 20 early- stage Indian companies made five exits to date, including the IPO of Indiabulls that has been valued at over $ 3 billion. While Srivastava has made investments -- both large and small -- in his three- decade- long career, the focus now is on small businesses. He says, " I am amazed at the potential of small businesses. Writing a cheque of one crore might not be fashionable enough but I am doing it now and making investments in the range of Rs 1- 5 crore in small businesses."

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Publication:Mail Today (New Delhi, India)
Date:Sep 22, 2009
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