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“India a financial Mecca for entrepreneurship”

May 2008
“India a financial Mecca for entrepreneurship”

India is shining and a lot of what glitters seems to be solid gold. That was the message conveyed by Anil Khatod, Managing Director and lead India partner at Argonaut Private Equity, a diversified global private equity fund with more than $3.5 billion under management. Armed with varied information and numbers, Anil made a stellar presentation on 19th March at the TiE monthly event in Atlanta.

In the past six years, in spite of a 25 percent market correction, the Indian sensex has provided a 27 percent compounded annual return. There is relative volatility in the numbers but that is why it is so exciting to look at these markets outside of the mature markets with an emphasis on long term investments.”

Khatod quoted from the Goldman Sachs report which indicated that the Indian economy started a transformational process from 2003 and that the country can sustain a growth level of about 8 percent in GDP until 2020. Since 71 percent of Indians live in villages, a huge urban migration is expected over the next 20-30 years leading to an urbanization bonus. While $45 billion have been invested in India last year by foreign investment, Khatod pointed out that it’s just a drop in India’s trillion dollar economy. India’s savings rate, fewer dependants in each household and a young working force have enabled the economy to do well.

Khatod said, “By 2016 India is expected to overtake Italy as one of the larger economies and follow that up by overtaking France and Germany. So somewhere around 2025, you will find India in the top 6 economies in the world.”

Khatod said that he was happy to say that capital markets in India had finally taken a step in the right direction—to function like world class markets. Khatod was in favor of investing in India and China because their economies are growing, and a large number of people with higher income are entering the market. With all the commodity inflation you are also better off consuming what India and China are producing. It will keep consumption costs low.

He cautioned that there are some cardinal rules that one must implement such as a thorough background check, hiring the best teams, forensic checks, and fraud checks when investing in India.

Nandan Sheth, TiE Atlanta President, was very appreciative of Anil Khatod’s exhaustive presentation. “I am not aware of many institutional investors in the Southeast that can provide a real perspective on private equity investing within emerging markets like India, Israel and Australia, as Anil can,” he said. The response from attendees at the packed event, inspired Sheth to invite Khatod back later in the year to share a score card of how his portfolio had performed.

~Kavita Chhibber


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