Approach to investment

Deal Sourcing

ICICI Venture’s investment process commences with the sourcing of deals. Being the premier private equity player in India, its reputation and brand equity has been attracting investment proposals and deals from entrepreneurs, management teams, promoters and intermediaries. Deals are also directly sourced from industry contacts of the management team. Besides, ICICI Venture also leverages its network with investment banks, fund investors, and also draws upon its access to the ICICI Bank Limited network with its large corporate clientele.

Deal evaluation

ICICI Venture engages in a rigorous as well as disciplined decision-making process prior to making an investment. When considering a potential transaction, it conducts a timely and thorough due diligence investigation. The skills of its investment professionals are important to the due diligence process, as they are able to determine the optimal structure and financing methods for a particular transaction, as well as negotiate favourable acquisition terms. ICICI Venture has an in-house risk, legal and compliance team, which provides transactionary support to the investment teams & greatly enhance the response time. The investment proposal would move through various stages of preliminary analysis, initial meeting, internal valuation discussion, valuation negotiation, term sheet negotiation, management committee meeting and due diligence appraisal meeting before it is proposed in the Investor Committee meeting.

Investment decision

The Investment Committee reviews a deal recommended for investment and either approves or rejects the investment proposal. The Committee may, if deemed necessary, ask for further analysis, additional due diligence or any other clarifications. The final decision is based on a majority vote in the Investment Committee.

Post-investment process

ICICI Venture endeavours to ensure that the portfolio companies are governed effectively and that there is active involvement and timely intervention by the team once the investment is made. The team creates value in the portfolio companies through strategic, operational and financial initiatives aimed at strengthening their competitive position vis-à-vis competitors and industry benchmarks. The investment team works with management teams to identify opportunities for enhancing value through cost reduction and internal rationalization. They also work together to implement growth strategies based on market definitions, customer segmentation, price management, focused marketing and sales plans, strategic capital investments and/or the introduction of proven technologies. The investment teams also help in further strengthening the management teams. ICICI Venture works actively with management teams to identify and execute acquisitions.

Exit strategy

ICICI Venture seeks to achieve a timely and appropriate exit to return cash and profits for its investors. Such exit strategies may include:
• Selling off the stake to strategic investors;
• Initial Public Offering in India or overseas;
• Sale to any other private equity fund or venture capital fund;
• Secondary sale on stock markets;
• Merger with an existing listed company; and
• Management/company buy-backs.

The holding period of each investment is generally 3-5 years. This, however, depends upon the stage of investment and the performance of the sector and the company.

Indian Investment Network

The Indian Investment Network is an online platform connecting local entrepreneurs with angel investors in India and internationally. This is an Internet-based matching service for angel investors seeking investment opportunities and entrepreneurs seeking capital. The Network is part of a global network that connects local entrepreneurs to investors based in India, or various countries around the world. For investors, thousands of business investment opportunities are available, including start-ups across a wide range of market sectors.

URL : http://www.techmonitor.net/techmon/09sep_oct/tm/pdf/TM_Oct2009.pdf