Warburg Pincus and India
Knowledge@Wharton dissects Warburg’s success in India:
India has done well by Warburg, generating returns in “the mid-30s over 10 years,” the firm’s co-president, Charles R. Kaye, said…In turn, the firm has favored India. Warburg is the largest private equity investor in India by far, having ploughed $811 million into the country as of mid-2005. This amount is more than twice the $362 million Warburg has invested in China, according to data provided by the National Venture Capital Association in Arlington, Va.
One of the biggest changes Pathak says he has noticed has nothing to do with numbers. “There has been a complete change in the confidence level of people in India,” he says. The “tipping point” here was the contribution of Indian information technology companies to averting a worldwide Y2K meltdown. Suddenly, India’s small IT companies went global, and the government — long accustomed to regulating big industry but unfamiliar with IT — had nothing to do with it. Now “most people believe they will not let government get in their way,” Pathak says, “and that’s why we keep putting money there.”
There’s a swagger in the step of India’s business, and the country’s government is showing signs it has caught the contagion, Kaye says. According to a 2003 Goldman Sachs report, “India’s economy could be larger than all but the U.S. and China in 30 years.” It’s a prediction that doesn’t appear far-fetched to Kaye and Pathak.