A Thillai Rajan

Purpose – The venture capital and private equity (VCPE) industry in India has grown significantly in recent years. During five-year period 2004-2008, the industry growth rate in India was the fastest globally and it rose to occupy the number three slot worldwide in terms of quantum of investments. However, academic research on the Indian VCPE industry has been limited. This paper seeks to fill the gap in research on the recent trends in the Indian VCPE industry. Design/methodology/approach – Studies on the VCPE transactions have traditionally focused on one of the components of the investment lifecycle, i.e. investments, monitoring, or exit. This study is based on analyzing the investment life cycle in its entirety, from the time of investment by the VCPE fund till the time of exit. The analysis was based on a total of 1,912 VCPE transactions involving 1,503 firms during the years 2004-2008. Findings – Most VCPE investments were in late stage financing and took place many years after the incorporation of the investee firm. The industry was also characterized by the short duration of the investments. The type of exit was well predicted by the type of industry, financing stage, region of investment, and type of VCPE fund. Originality/value – This paper highlights some of the key areas to ensure sustainable growth of the industry. Early stage funding opportunities should be increased to ensure that there is a strong pipeline of investment opportunities for late stage investors. VCPE investments should be seen as long-term investments and not as “quick flips”. To achieve this, it is important to have a strong domestic VCPE industry which can stay invested in the portfolio company for a longer term. © 2011, Emerald Group Publishing Limited.

Purpose: Developing countries are increasingly looking to private sector investment for infrastructure development. Successful development of private infrastructure projects, however, depends on adequate availability of long-term debt to complement private sector equity. As domestic bond markets in many emerging countries are not very deep, availability of long-term debt funding for infrastructure has been limited. Recently, a new form of financial intermediation has emerged in India with the creation of infrastructure debt funds (IDFs) to create capital pools for long-term debt funding. This paper aims to analyse the effectiveness of IDFs for financing infrastructure projects. Design/methodology/approach: This paper uses a case study approach. The case studies were written using both secondary and primary information. Secondary information was obtained from various sources such as policy papers, websites and other published sources. Primary information was obtained from interviews with the top management of three IDFs. Information obtained from multiple sources was triangulated for consistency and correctness. Findings: IDFs have emerged as an effective intermediation mechanism for attracting long-term capital by offering a new investment product with appropriate risk-adjusted returns. For the fund seekers, IDFs are able to provide long-term capital at lower rates and higher flexibility. Unlike commercial banks, IDFs are able to add value to the projects apart from funding by periodic monitoring of the projects. Practical implications: Creating new forms of financial intermediation can help in reducing the financing gap for infrastructure projects, especially in emerging countries. Originality/value: IDFs have been analysed from a perspective of financial intermediation. The effectiveness of IDFs in bridging the funding shortfall has been evaluated from multiple perspectives.

Purpose – Public-private partnerships (PPPs) are being frequently used today to private sector investment in road projects. Most of the road PPP projects are either for new roads or for those that involve significant expansion of existing capacity. There are limited instances of PPPs for renovating and maintenance of existing roads. The purpose of this paper is to highlight the applicability of using PPPs for road renovation and maintenance projects. Design/methodology/approach – This paper uses a case-study approach since it is an appropriate strategy to investigate a phenomenon within its real life context. The East Coast Road project was chosen for the study because it was the first project in India to use PPP for road renovation and maintenance, and being the first project of its kind, the case was of general public interest. Findings – The paper indicates that risk levels in Rehabilitate, Improve, Maintain, Operate and Transfer (RIMOT) projects are lower than Greenfield BOT projects. Even in areas like renovation and maintenance, PPP structures can bring many advantages over traditional procurement. Research limitations/implications – This paper has the limitations attributable to single case studies. There is a need to extend this paper to include more such case studies to evaluate their relevance for infrastructure development, particularly in emerging countries. Practical implications – PPP structures can be useful for renovating and maintaining the existing roads. Modalities such as the RIMOT framework can have greater potential than the conventional BOT structures. Private investments in infrastructure can also be through a corporate finance structure. Originality/value – This paper describes and analyzes the experience of India's first PPP for renovation and maintenance. The findings of this paper would have value for policy makers who are interested in attracting private sector finance and expertise in infrastructure and more specifically in roads. © 2010, Emerald Group Publishing Limited

Purpose – The purpose of this paper is to understand the trends and contribution of private equity (PE) investors in real estate development in India because the real estate sector in India had witnessed significant investments from PE firms in recent years. Design/methodology/approach – The study focused on residential segment of real estate development, as it is the largest among all the segments. Two types of analyses have been done in this paper: first was to compare residential projects with PE investment with those that did not have any PE investment. The results were based on an analysis of 453 residential projects. The second was an analysis of only those projects that had PE investment. This paper studied if there were differences in investment patterns between domestic and foreign PE investors, and dedicated and diversified PE investors. Findings – Projects with PE investment were larger, as compared to projects that did not have any PE investment. The results of this paper also showed that PE firms preferred to invest with developers who had significant experience in undertaking larger-sized projects. PE investments significantly happened in projects that were located in metro cities. While PE firms as a whole preferred to invest in project mode, domestic investors were more inclined to invest in a project structure as compared to foreign PE firms. Though foreign PE firms invested more amounts per deal on average, there was a negative relationship between foreign PE firms and the extent of their shareholding in the investment. Practical implications – Encouraging PE investment in real estate projects would contribute toward to increasing the transparency in the sector. Strengthening the domestic PE industry would increase investment flow for real estate projects. PE investors who are able to add value to their investments are able to obtain higher shareholding. Originality/value – Empirical research on Indian real estate industry is scarce because of the lack of transparency and availability of reliable data. This is one of the initial studies on the Indian real estate sector based on a robust dataset.

Subject area: This case provides useful material for discussion on topics such as sustainability, business continuity, corporate social responsibility and green IT. Study level/applicability: The case could be used in different areas of business management such as general management, information systems and business strategy. Case overview: The case presents the progressive evolution of Infosys Limited from its beginnings through different stages of innovation and consolidation in the IT services industry. Senior executives at Infosys believe that the sustainability initiative at Infosys is not a new movement, but a logical extension of the company's long standing commitment to society and environment. Sustainability was a key agenda at Infosys and it was deeply ingrained in the company's ethos and the way in which it operated. The case also articulates the company's commitment to sustainability as evidenced by the involvement of the top management in providing leadership. From an academic standpoint the case provides pointers to look at how the IT services industry has responded to sustainability practices and how sustainability practices are different or similar across various firms. Expected learning outcomes: The case can help students to answer the following questions: How is sustainability different from corporate social responsibility? What is the context in which Infosys' attention turned towards sustainability? How is top management involved in Infosys' sustainability initiative? What are the elements of Infosys' sustainability strategy? How does it build on its core strengths? What are the structural mechanisms the company has provided to implement its sustainability strategy? What internal challenges to change while implementing green solutions were foreseen and overcome by Infosys? How competitive is Infosys' sustainability practices with respect to its competitors? How does it help the company in competing in the market? Supplementary materials: Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Purpose: The purpose of this paper is to understand the risk-return profile of merchant power plants (MPPs) as compared to power plants with off-take agreements in the Indian context. Design/methodology/approach: Information from the literature was analyzed to identify major risks associated with MPPs. Literature pertaining to risk analysis of capital investments and simulation technique to analyze risks was studied. Financial models for a power plant with off-take agreements and that for an MPP were developed and risks have been analyzed by incorporating uncertainties. The risk analysis was performed with the application of stochastic simulations using the Monte Carlo technique. Findings: The results indicate that risk-return profile differs significantly for a MPP as compared to a power plant with off-take agreements. The model indicates that equity internal rate of return (IRR) for MPP ranges between 49.33 and 0.43 per cent with mean IRR values ranging between 28.86 and 13.53 per cent for different scenarios. The mean equity IRR for a comparative power plant with off-take agreements is 14.83 per cent. Research limitations/implications: The project financial models are developed using typical values for the Indian context. The robustness of the results can be improved by considering project-specific variables in the financial model. Owing to limited availability of past data, power price fluctuation scenarios have been generated based on expert opinion. When additional data on power price become available, these could be incorporated in the simulation analysis. Originality/value: MPP is a new concept for India. There is very little research in this area. This paper makes an attempt to understand the financial risk and return from MPPs in more detail. © Emerald Group Publishing Limited.

Construction cost overrun and time overrun are significant problems in infrastructure projects. This study provides a comparative analysis of the incidence of project overruns in Public Private Partnership (PPP) and non-PPP road projects. Data from national road projects in India was used as the study sample. Means analysis, both using an unmatched sample and matched pair analysis indicated significant overruns between PPP and non-PPP projects. While cost overruns were higher in PPP projects, time overruns were higher in non-PPP projects. These trends persisted in OLS regression estimates. A three stage least squares regression estimated to address the simultaneity bias also showed that use of PPP increased cost overrun, though it did not affect time overrun. Results obtained in this study are contrary to the findings of the previous studies, which have been based on PPP projects in developed economies. The findings emphasize the need for developing countries like India to strengthen their capabilities in PPP models to take advantage of private sector efficiencies. © 2013 American Society of Civil Engineers.