$20M India investment fund proposed

BYLINE: Andrew Nelson

An Atlanta entrepreneur who believes American investors can profit by buying into Indian companies hopes to start a private investment partnership to trade Indian stocks.

Parag Patel on Oct. 16 filed plans with the Securities and Exchange Commission to raise more than $20 million for the venture, known as India Performance Fund L.P.

With some 4,500 listed companies at the Bombay Stock Exchange, Patel, 36, has his sights on 950 or so small and midsized companies often ignored by American investment firms with an Indian focus.

"There are a lot of companies that are undiscovered," said Patel, who says he previously worked in the securities business in New York.

He hopes to join a growing line of American companies looking for opportunity in India and betting on a continued favorable business climate in the South Asian country, which is about one-third the size of the United States.

In 2005, U.S. companies invested some $8.5 billion in India, an amount that has doubled since 2002, according to the U.S. Bureau of Economic Analysis.

According to a report by Ernst & Young LLP, one-fifth of all Fortune 500 companies have set up research and development facilities in India.

India is moving beyond being just a place for cheap labor as the work force adds value to services, said Ashish Mistry. He is vice president of The RCMS Group, a local company using India-based workers to build sophisticated construction blueprints and 3-D virtual building plans.

Mistry said his organization has about 60 people in India. There is a shortage of talent in the United States that can work on these designs using the latest technology, he said.

The 3-D plans allow people to view the building, walk through hallways and see the structure before the foundation has been dug.

But at the same time, the work can be done in India at a nearly 30 percent lower cost than in the United States, said Mistry, who served as chairman of the 2005 Network of Indian Professionals National Conference.


An 'elephant' economy

The growth in economic ties between India and the United States has taken off as the country changes to a free market economy and ties between the U.S. and Indian governments improved after the Cold War.

Political leaders of all stripes have adopted the free market, Patel said. "Even the communists are capitalists in India," he said.

Growher Rizvi, an India expert at Harvard University's John F. Kennedy School of Government, said a growing middle class in India along with changes in economic government policy have spurred the strong growth since the 1990s.

One political leader described the Indian economy as an elephant, slow to gain momentum, Rizvi said, but "once the momentum is going, there is nothing to stop it."


Georgia-India ties strong

A recent workshop on India-Georgia economic relations attracted scores of people to Georgia State University, including Commissioner Craig Lesser of the Georgia Department of Economic Development and the commerce minister from the Indian embassy.

There is a strong interest in Georgia establishing a trade office in India and the issue will be reviewed once the new trade office in China opens, Lesser said.

There is a grass-roots push to improve business ties. The Indian business community here wants to introduce local leaders to peers in India, he said.

On top of that, trade opportunities exist and there is a strong appeal for cultural and educational exchanges, Lesser said.

According to the census, some 79,000 Indians lived in Georgia in 2005, up from 46,000 in 2000.

The machinery is in place to strengthen business relationships. The Indian government is represented in Atlanta with an honorary consul. The Georgia Indo-American Consul Chamber of Commerce was founded six years ago and now has 150 members who promote professional relationships between the Peach State and India.

Last year, Georgia exported nearly $161 million worth of goods to India, a 13 percent increase in one year. Leading the exports are textile and paper products, along with computers and electronics.

At the same time, more than $442 million worth of Indian goods came through Georgia ports. Top imports are textile art and apparel.

For Patel, the goal is to find Indian companies that are undervalued with growth potential. The focus is on companies with a market capitalization of $75 million to $700 million.

The partnership is open to people and institutions with a minimum of $500,000 to invest.

Patel is conducting research and developing relationships, including a planned trip to India to visit with company leaders.

"The returns on the Indian market have been very, very good," he said. "The stocks aren't going up because of a mania. The stocks are going up because the underlying businesses are doing well."


Growing U.S. ties