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'India is white-hot in investment opportunities'

October 31, 2005 19:26 IST
Longtime India hand Mark J Riedy, who heads the South Asia practice at the leading Washington, DC law firm of Andrews Kurth LLP, is putting together the first-ever India Venture Capital Conference, to be held in San Francisco on Tuesday, November 1.

Featured at the event are the who's who of venture capital, private equity and hedge fund managers: Vinod Khosla, partner, Kleiner, Perkins, Caufield and Byers; Promod Haque, managing partner, Norwest Venture Partners; Vinod Dham, managing director, NewPath Ventures; Yogen Dalal, managing director, Mayfield; Sumir Chadha, senior managing director, Westbridge Capital Partners; Deepak Kamra, general partner, Canaan Partners; Sumant Mandal, managing director, Clearstone Venture Partners; Manik Arora, senior associate, Battery Ventures; and Diljeet Titus, senior member, Titus & Company.

Non-Indian American speakers and panelists include Lip-Bu Tan, chairman, Walden International; Barry Taylor, managing director, Warburg Pincus; Allan C Thygesen, managing director, The Carlyle Group; Scott Wentz, managing director, IndUS Consulting; and Andy Tucker and Carmelo Gordian, partners at Andrews Kurth.

Besides keynote presentations by Khosla, Haque (who will speak on Evolving into the US-Israel Model: How India can mirror Israel in creating global product companies) and Anand Deshpande, CEO Persistent Systems, the panels will discuss a range of topics such as 'The Dynamic Landscape: Leveraging India for Capital Efficient Global Innovation; 'Modes to Entry: Strategic Ways to Invest in India'; 'Due Diligence Strategies: Evaluating Investment Candidates in India' and 'How to Exit: Understanding Liquidity and Mergers and Acquisitions'.

There will also be two special panels on India 2.0: The Innovation Source and Strategic Investing, and Leveraging Outsourcing Companies for Global Growth.

In asking the question 'Why India?', the conference brochure put out by International Business Forum, which has been hosting such conferences for the past 16 years, said, 'With India's 15-year-old reforms process taking effect, India is poised to be one of the fastest growing economies and is now the prime target for the VC community.' It said 'aided by a maturing market, substantial local presences by tens of multinational companies and feverish entrepreneurial spirit, India's business productivity and technology growth are peaking. Additionally, India's stock markets are booming like never before, strengthening the investment climate and consistent expansion of their IT market.

Encouraged by this explosive growth, India now offers investors the best promises for returns to-date,' Conference co-chair Riedy, who has been working in South Asia for more than 25 years and has lived in India for six of those years, told rediff India Abroad, "We already have more than $100,000 in committed sponsorships for this event, and over 350 attendees -- the majority of them senior level fund managers and investors."

Each attendee will pay close to $1,000 to participate. The conference is being supported by the US-India Business Council, The IndUS Entrepreneurs and NASSCOM.

"India," Reidy said, when asked the rationale for such a conference, "is white-hot in terms of investment opportunities into companies and projects, and although the conference is titled Venture Capital, it really will also involve private equity and hedge funds, and there are companies that really were the investors for Silicon Valley that grew out of the major technology companies in that region. And what they

are trying to do is incubate funds in India to duplicate Silicon Valley growth in India for the technology and other sectors.

"What we hope to achieve first and foremost is to have the more than 350 attendees realistically consider India, review it, and start setting up funds to achieve the investments that are available and to do it in short order," Riedy said, adding that potential investees from India would also be attending, including one of his own clients, Unit Trust of India.

"There are a number of funds that will be there, that have offices already in India and are setting up funds. On the investee side, we've sent invitations out widely through the various associations, so that potential investees can meet up with potential investors."

Riedy said the key areas the conference was looking at included the dual technology areas of IT, namely services and hardware; biotechnology; healthcare and pharma. "And then, more on the project side, construction -- because that area has now opened up for foreign direct investment, although with certain restrictions.

"We are also looking at other projects that may be infrastructure-oriented, as India is opening up its infrastructure again with the settlement of the Dabhol controversy," he said.

Riedy, over the years, has been a strong critic of what he terms the glacial pace of reform in India, and more particularly of the problems in the energy infrastructure area and India's reluctance to rein in the state electricity boards and stop subsidising power.

"To the extent that I've been critical, it's been constructive criticism — I've tried to be frank to let people know, and I still maintain to this day that investors can't understand why India moves so slow," Reidy told rediff India Abroad. He pointed out that the 2005 report by the International Finance Corporation, the private sector arm of the World Bank, "ranks India at the very bottom of developing countries for its slowness. So it's not just me, its other people that see it."

Reidy said the advent of the Congress-led government, the reins of which are held by Dr Manmohan Singh, the father of India's economic reforms, made him optimistic "because this government has many of the same players that were there in the so-called 'gold-rush' years of 1992 to 1996, with liberalization beginning, and that was predominantly in the infrastructure sector.

"There was no such thing as this big boom in technology," he recalled, "and so technology services came about during the BJP-led government — not that they were promoting it, but they couldn't figure out how to regulate it."

He noted that India now has a nearly eight per cent growth in GDP based on technology alone; plus "you have the potential of new infrastructure growing equally to the technology base and my feeling is, it is because of the administration that's back in power." He predicted that India has the potential to achieve 8 percent growth annually despite the energy crisis.

Riedy, who besides being a partner at Andrews Kurth — a 120-year-old firm that has specialised in building international energy infrastructure, creating the global asset securitisation market, helping resolve trade disputes, and more recently, putting together technology transactions, has also for the past 12 years been an executive board member and general counsel of the USIBC.

Over the years, he has chaired several USIBC committees such as the ones on Energy and Communications, and in his capacity as the attorney for the organisation, also sits on all of the USIBC's 12 committees, including the newly constituted Real Estate and Construction Committee.

Aziz Haniffa in Washington, DC