India posts strong quarter

Venture investment in India grew substantially during the first quarter of 2007, with the number of deals nearly tripling over the same period in 2006, according to data from Thomson Financial (publisher of PE Week).

VCs invested nearly $640 million in 37 Indian companies in the first three months of the year, up from the $53.5 million they invested in 13 companies during the same period in 2006.

The data was partly skewed y several large investments. The biggest deal in Q1 was Morgan Stanley Private Equity’s $153 million investment in Mumbai-based Oberoi Constructions. Runner up was Nimbus Communications, a company that offers services to movie production companies. The Mumbai-based company received a $125 million bridge loan from 3i Group and Cisco Systems.

But many investors are pursuing early stage investments in India. A total of 19 of the 37 deals were either under $10 million or had an undisclosed deal value. It “…augurs very well for the VC ecosystem in the country,” says Sudhir Sethi, the director of the US-India Venture Capital Association and a managing director of IDG Ventures India.

Three venture-backed IPOs drove investment in India during the quarter, according to Venture Intelligence and the US-IVCA: MindTree Consulting, FirstSource and Global Broadcast News.

MindTree, an IT services company, raised $23.5 million from Capital International Asia, Global Technology Ventures, Templeton Asset Management, Walden International and WIIG Global Ventures Private Limited. FirstSource, a business process outsourcer, raised $35 million from Temasek Capital and Westbridge Capital Partners in 2004. Global Broadcast News, an English-language news channel, raised $9 million in 2006 from the Leverage India Fund. —Alexander Haislip