Zee News Nov 30, 2008 Terror Attacks Not To Impact PE Investments In India

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"The Indian economy keeps giving enough opportunity to PE investors to maximise returns. There might be some short-term pressure on hotel and tourism as a whole, but their money will keep chasing opportunities," NexGen Capitals Equity Head Jagannadham Thunuguntla said.

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Zee News Nov 30, 2008 Terror Attacks Not To Impact PE Investments In India

  1. 1. Terror attacks not to impact PE investments in India: Experts New Delhi, Nov 30: Private equity investments are likely to remain largely unaffected by the terror attacks, which shook Mumbai, because the country remains a popular destination for investors in the long term, experts say. quot;There will be no major impact on the private equity fund flow into the country as these funds prefer to stay invested for the longer term. There will be no dramatic change in the PE firms' interest in India,quot; research firm Venture Intelligence CEO Arun Natarajan said. Terror attacks last week have left over 150 dead and nearly 300 injured, along with huge damages to the Taj and Oberoi hotels. quot;The Indian economy keeps giving enough opportunity to PE investors to maximise returns. There might be some short-term pressure on hotel and tourism as a whole, but their money will keep chasing opportunities,quot; NexGen Capitals Equity Head Jagannadham Thunuguntla said. NexGen Capitals is the merchant banking arm of brokerage firm SMC Global. Experts say that although the attacks might have some impact on the earnings of the hotels and other companies related to the tourism industry, the investment flow into the country would not be impacted much. quot;South Mumbai, where the attacks happened, is already crowded. There is no further scope of any new investor putting up in the place. So regionally also there will be no impact of the attack on PE fund flows,quot; Natarajan added. PE funds had invested USD three billion in 116 Indian companies during the quarter ended September 2008, down 29 per cent from the year-ago period. These funds had put in 115 deals totalling USD 4.2 billion last fiscal, according to data compiled by research firm Venture Intelligence. quot;Investors are mature enough to understand risk situations. Terrorist activities will not dent their investment preferences. A slowdown in PE investment in aviation companies will be because of the risky nature of the business and the weak long-term outlook,quot; Thunuguntla said. Experts feel that the worsening economic situation had led the private equity firms to stay out of new ventures. quot;Things (fund flows) are already bad. What the attacks have done is to bring in some confusion and discomfort among the investors. But these are all short-term,quot; Natarajan added. Meanwhile, reports suggested about 15 per cent domestic airline bookings cancellations, as western countries have either issued travel advisories or cautions. Foreign tourist inflows are likely to slow down. In the short term certain industries such as tourism and hotels are likely be impacted, Edelweiss Securities said in a report. Meanwhile, Ashika Stock Brokers Research head Paras Bodhra said that the income of the hotel and
  2. 2. aviation sector is expected to decline as with repeated attacks the country is being taken as a soft target for terror attacks. quot;With the attack on the country's two heritage brands -- The Taj and Oberoi -- the tourism industry is likely to take a big hit as the attack happened at the peak time of tourism.quot; India's aviation sector has seen a host of PE investments, including Wilbur Ross investing USD 100 million in SpiceJet. quot;It will be a double-whammy for the investors as the situation was already gloomy in the Indian aviation sector. The goodwill of India's tourism industry has been affected and this will affect the top line of the companies,quot; Bodhra added. Bureau Report

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