PE Firm Jacob Ballas to Back Indian Market

India-focused private equity firm Jacob Ballas Capital expects to invest about $150 million in Asia’s third-largest economy over the next 12 months, reports Reuters. The firm, backed by New York Life Insurance Co, currently manages funds worth $600 million in India, writes Reuters.

(Reuters) – India-focused private equity firm Jacob Ballas Capital expects to invest about $150 million in Asia’s third-largest economy over the next 12 months, scooping up assets that offer strong long-term growth, a top official said on Wednesday.

A sluggish near-term economic outlook has brought down valuations in the country of more than 1.2 billion people, and has thrown up good opportunities, Srinivas Chidambaram, managing director of the firm’s Indian operations said.

“Most of the companies are more reasonably priced now. If you have cash, it’s a good time to invest,” he told Reuters in an interview.

The company, backed by New York Life Insurance Co, currently manages funds worth $600 million in India.

Chidambaram said he hoped to do 3-5 transactions in the next one year as companies turn increasingly to private equity for risk capital due to a dormant market for initial public offering.

“There is some change in mind set and entrepreneurs are not waiting for the capital markets to recover. People now believe in PE as a sensible alternative,” he said.

India’s benchmark stock index has fallen 18 percent this year, as 13 rate increases by the central bank since early 2010 to fight inflation pushed up borrowing costs, dented consumer spending and hurt corporate earnings.

Private-equity investments in India jumped 31 percent to $7.89 billion in the first three quarters of 2011, according to data from auditing and consultancy firm KPMG.

However, the pace of transactions is slow, despite more than $20 billion raised by private equity firms to invest in India.

“Overall, investors are being discerning,” Chidambaram said. “But companies need to raise capital and private equity offers certainty and a longer term option when there are no other means of raising funds.”

Many global private equity firms such as Blackstone, 3i Group and KKR to homegrown IDFC and ICICI are also betting on the long-term prospects in India.

About $7 billion worth of public offers were either called off or deferred, making India as one of the toughest exit markets for funds, according to data from SMC Global.

“IPOs have been our preferred exit route … and the near term looks tough. And at the same time, we consider other exit routes such as trade and secondary sales actively,” Chidambaram said.