Elephant Capital to pick small stakes in Indian companies
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Elephant Capital to pick small stakes in Indian companies
Bangalore: India focused Elephant Capital, a private equity fund, is focusing to invest in those deals which will ensure a majority of stakes in a company. The firm is scouting for more deals in privately held firms. This is a investment strategy shift for Elephant, as till now it had been largely picking up small stakes in the listed Indian companies through secondary market transactions, the VCCircle reports. In its interim results the AIM listed fund said that picking large equity stakes had become difficult when the bull market was in action, "This was because the valuations of small and mid cap businesses had accelerated, putting them out of reach for a small fund like Elephant, whilst entrepreneurs, confident of the continuing strength of the bull market, were unwilling to cede control." Now it feels the changed circumstances will offer more control opportunities. The strategy to concentrate more on the privately held firms might be because of the fact that the company is sitting on unrealized gains of 58 percent plus on its sole investment in an unlisted company- Obopay. Also, the Elephant CapitaL has invested in the NIIT. The company had announced that it made a follow on investment in NIIT. In March 2008, the company invested approximately - 1.3 million for 1 million shares in NIIT through market purchases. In October and November 2008, the Company invested a further 0.6 million pound by purchasing 1.6 million shares in the secondary market, bringing its aggregate position to 2.6 million shares. Combining the investments, it comes to around 1.5 percent stake in IT education firm NIIT for around Rs 15.5 crore, the fifth investment in India for the AIM-listed India focused private equity firm. The company stated that while they are encouraged by recent performance of the stocks, which has doubled more than what is was earlier, it regrets not taking the opportunity to increase its position at weaker levels, but was reluctant to do so until the strategy with respect to this investment had been settled. "However, we strongly believe that the current point in the cycle calls for discipline, not undue risk taking, and therefore felt obliged to turn down opportunities where we were not satisfied on the basis of due diligence, corporate governance or valuation. As a result of its disciplined approach to making investments, the company has conserved cash in what has been a volatile market, and is now well positioned to act if market conditions allow. With the credit markets remaining under pressure, cash and liquidity are highly valued, putting pressure on entrepreneurs to compete for investment on the basis of valuation, corporate governance and transparency standards. We believe that these trends should create opportunities for us to invest our capital to further grow and develop the company's portfolio," the company informed.

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