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Monday, April 17, 2006

Indian IT Ecosystem : Signs Of Renewed Confidence

While the Indian IT firms are rolling out impressive, results and are poised for more aggressive growth in the new financial year starting Apr 1 2006, comes the news of a major leap in private equity flow into its ecosystem. The size of the deal is indeed significant and marks a new high in the asian context. I recently wrote that despite a lack of established VC culture, this time around things are happening within the country, while the pitfalls were apparent, the growth momentum is indeed palpable.
Kohlberg Kravis Roberts, the New York private equity firm, is buying out85 percent of stake the Indian software maker Flextronics Software Systems in what would be the largest leveraged buyout in India vakued at around 900Million USD. KKR will buy the stake from the singapore based software maker's parent, Flextronics International, widely known as the world's largest maker of electronics for other brands, including Microsoft Xbox video game consoles and Dell computers. The Indian arm specializes in the software embedded in electronic equipment, including the highly specialized, cutting-edge software that allows people to send multimedia messages over their mobile phones. For starters, what started as a software unit for Hughes Electronics and was sold to Flextronics and is now all set to become a stand alone company. Private equity flow (aiming for higher returns) into Indian ecosystem signifies the potential of its growing software industry. Major private equity players like Blackstone Group, Carlyle Group, General Atlantic Partners, Warburg Pincus and Temasek Holdings are active in the market. The trend of private equity flow into the country is showing a huge raise and in a way is an important barometer for the sector and country’s health

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