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.
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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.
