In India, Cold Cash For Hot Growth

Companies are turning to private equity to finance expansion

When India's economic liberalization in 1991 blasted open its tightly shut market, Italian steel-forging company Fomas jumped into action. After selling turbine parts and other accessories in India for years, Fomas decided to create a local subsidiary with its distributor, entrepreneur N. Narayanswamy. Fomas contributed 51% of the necessary $4.2 million in capital, and Narayanswamy kicked in about $380,000 for a 9% stake. The partners figured they could raise the remaining $1.7 million from a stock offering.

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