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GE Capital plans Indian private equity unit

India's tech sector may be going through a rough patch but that hasn't put off General Electric Co's GE Capital unit, which says it plans to set a firm to take advantage of opportunities in the country's new economy.

GE Strategic Investments, owned by GE Capital Services India, is targeting investment of $40-$60 million a year, said Puneet Bhatia, equity group chief executive at GE Capital Services.

"The aim is to step up our investment activities in India," Bhatia said in an interview late on Thursday.

"We feel it was time to set up a concrete structure to monitor and channelise the investments we make."

Apart from the software and IT sectors, the company will look at opportunities in media and healthcare, Bhatia said.

The plan fits with GE Capital's overall India strategy, but also comes at a time when there is growing concern about the ability of local tech firms to sustain recent high growth rates.

Fears that a slowing US economy will hurt software firms were underscored in April when bellwether Infosys Technologies warned of slower revenue growth in 2001-02.

Infosys said its revenues would grow 30 per cent in the current year from over 100 per cent a year earlier.

Analysts expect other Indian companies to be affected too, and market intelligence firm International Data Corp said recently that it now expected software exports to grow 20-25 per cent in the current year, down from 52 per cent last year.

Still optimistic

But Bhatia said the current situation did not necessarily diminish the value of local software companies.

"You still have them growing at 40-50 per cent, and as a country we are still growing the gross domestic product by around 6 per cent," he said.

GE Capital's private equity investments in India total about $65 million in 12 companies.

Compared with its global private equity investments of $4 billion, including around $300 million in the Asia-Pacific region, the figure may look small, but Bhatia says: "We are only two years old and are moving up the learning curve."

The bullishness is also reflected in the company's track record in India. GE has been using the country's cheap and skilled workforce for many of its global operations.

GE Medical Systems, for instance, uses its facility in Bangalore to export complex medical equipment worldwide.

The Web sites for GE's American and European businesses were also created in India.

In less than a decade, GE's Indian operations have grown to annual turnover of $1 billion, a feat few multinationals in the country have managed.

Talking to a magazine last year, the head of GE's Indian operations, Scott Bayman, said his target was to more than double turnover to $2.5 billion by 2005 and $5 billion by the end of the decade.

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