Below I have posted two snapshots of the private security industries in Pakistan and India. In a nutshell, those industries are exploding with growth. In Pakistan, terrorism is the driver of this increase. In India it is a combination of economic expansion along with terrorism as the drivers.
Of course Pakistan and India are very mistrustful of one another, and there is also the growth of their defense industries to meet the needs of their militaries. Interesting stuff and definitely an area to keep a watch on. –Matt
Boom in Pakistan’s private security industry
January 18, 2011
Pakistan’s deteriorating law and order has led to a boom in the private security industry in the country. Companies are investing millions of dollars to train and update their security operations.
An estimated 30,000 private security guards have found employment with 400 private security agencies that have sprung up in Pakistan in recent years. These guards are paid about ten thousand Pakistani rupees a month… well above the minimum wage of six thousand.
Specialist security guards and bodyguards make around 25 thousand rupees.
Training includes special focus on the deadliest of enemies, the suicide bomber. Iqbal Mahmood, the trainer at Security 2000 explains how to look for one. “If someone is draped in white dress, particularly resembling a white shroud is a sign that the person has come ready to die. This is usually the first sign, secondly when the body looks a bit out of proportions; particularly the chest is raised higher than a normal human being is another give away sign that this person might be a suicide bomber,” says Mahmood.
The security industry in Pakistan is worth around 60 million dollars a year. Visit any luxury hotel in Pakistan and you’ll see where the money is being spent.
Zahid Shah, Security Manager at Pearl Continental Hotel says, “We have tried to maintain and standardise our security arrangements by beefing up this location with various kinds of systems, there can be hydraulic blockers, there are electronic barriers, there are sniffer dogs, besides of course the manual arrangements which is comprising of the security guards and the supervisors that we have.”
Story here.
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Booming private security agencies seek PE funding
Paramita Chatterjee & Pramugdha Mamgain
18 Jan, 2011
As rapid economic expansion creates a booming market for private security services, small and mid-sized companies in the sector are seeking risk capital infusion to further expansion plans. Growing public infrastructure in the form of roads, airports, shopping malls and commercial complexes has triggered a boom in the market for security services that is expected to grow five-fold to reach a size of 30,000 crore by 2015.
Delhi-based Security and Intelligence Services (India) is looking to raise nearly $100 million and is in talks with a slew of private equity firms . “The security sector is characterised by high growth, stable cash flows and margins, low capital expenditure and high returns,” said Rituraj Sinha, group chief operating officer of the firm that raised capital in 2008 from DE Shaw & Co , a New York-based hedge fund to acquire the Australian arm of the guarding and mobile patrol business unit of United Technologies.
Globally too, the security services sector has been red hot for private equity funds. Most major global funds, such as Blackstone, Carlyle, Dublier & Rice, have invested in security services space in the US, Europe and Japan over the last decade. In India, PE firm ICICI Venture Funds Management invested $26.74 million in Topsgrup in 2007, while Standard Chartered Private Equity invested $33 million in Firepro Systems in late 2009.
“The change in lifestyle of the last few years have boosted demand for private security services, with corporate offices, hotels, residential complexes as well as individuals becoming more concerned about security,” said an executive of a PE firm.
The sector has also seen a lot of mergers and acquisitions over the last few years. In August 2010, Goldman Sachs-owned Danish facility management firm International Service System acquired Chennai-based SDP Cisco for 200 crore.
G4S, the largest security services provider in the country, acquired real estate group DLF’s security firm TerraForce in 2009. As per estimates of consultancy firm Grant Thornton , the sector has seen M&As over $400 million over the past two years.
As per analysts tracking the sector, investments in the security services space have reaped high returns. “Expected consolidation in a largely fragmented industry, growth in physical demand for security services along with greater perceived need for security and evolving business models are seen as positives that are driving some of the private equity funds towards this sector,” said Mayank Rastogi, Partner (Private Equity) at tax and advisory firm Ernst & Young .
Story here.