Posted on 18 June, 2020
The Indian government has earlier announced that foreign
direct investments (FDI) from countries that share a land border with India
would go through only after its approval. This will specifically impact
consumer internet and tech-enabled businesses significantly and across stages,
says Pankaj Raina, Managing Director, Research and Investments, Zephyr Peacock
India.
Raina added that existing investee companies may not be able
to raise internal rounds from Chinese investors, which could create cash-flow
issues.
Click here to read the full article on ‘Business Line’
Below is an excerpt from the post which first appeared on
Business Line on 18 June 2020:
The gruesome India-China border clash along the Line of
Actual Control (LAC) delivered a body blow to the already strangled equations
between the two countries.
Not long ago, the Indian government had also announced that
foreign direct investments (FDI) from countries that shared a land border with
India would go through only after its approval. These factors could affect the
Indian start-up ecosystem, which has been receiving Chinese investments, said
investors.
It will specifically impact consumer internet and
tech-enabled businesses significantly and across stages, said Pankaj Raina,
Managing Director, Research and Investments, Zephyr Peacock India, a firm that
provides growth capital and management support to small and mid-sized enterprises
in the country. He added that existing investee companies may not be able to
raise internal rounds from Chinese investors, which could create cash-flow
issues.
There are nearly 118 Indian start-ups — companies that
received funding when they were less than 10 years old — that have a total of
$5.6 billion un-exited Chinese investments, as per data from Venture
Intelligence, a firm that tracks private companies’ investments, financials and
valuations. But with the scrutiny in place now, experts estimate that the
amount of time to raise further capital from Chinese investors will get
extended.
Zephyr Management is a global emerging markets investment manager, specializing in the creation and management of highly focused private equity funds
Since its inception in 1994, Zephyr has sponsored and/or managed 26 investment funds in both public and private securities markets representing approximately $1.2 billion in combined commitments and assets under management
Emerging Markets Focus
The firm has initiated several private equity funds investing in several African countries, South Korea, Mexico, India, and Sri Lanka since its founding. Zephyr's funds serve medium size enterprises that are often ignored by larger private equity players. Zephyr funds provide growth capital to established companies with proven business models and sustainable competitive advantages.
Investment activities are currently focused on India, Sri Lanka and Africa.
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Zephyr Peacock India provides equity financing for fast growing, small to medium sized companies led by strong entrepreneurs and management teams.
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Zephyr Acorn provides equity financing and business support to innovative early-stage companies in East Africa.
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The firm's special expertise lies in bringing global best practices to medium-sized growing companies by assisting them in conceptualizing sustainable business strategy, management development, compensation, ESG, expansion outside of their home country, capital structure and positioning for stock exchange listing or trade sale.