Private Security: The New Sunshine Sector

Rapid economic expansion in the country along with growing public infrastructure, be it roads, airports, multiplexes or even commercial complexes, is set to trigger a boom for the Rs 40,000-crore private security services market and companies operating in the sector.

Already, the demand for security services across the country has grown manifold over the past few years. Going forward, by 2020, it is expected to jump 100 per cent and become a Rs 80,000-crore industry, as per a study jointly published by Grant Thornton and Ficci.

What’s more, massive expansion in the sector is also expected to create millions of jobs for the masses over the next few years. The report further states that the private security industry in the country will generate around 50 lakh additional jobs by 2020. Currently, around 70 lakh people are employed in this sector.

Experts tracking the sector say that while it is the change in lifestyle over the past few years that is leading the growth in this sector, the growing terror threat across the world is also prompting private companies to beef up security services across the country.

Today, there are more -- airports, multiplexes and ATMs among others -- than ever, and the number is expected to only go up. This will automatically create opportunities for the overall sector. Already, sensing this big opportunity, a host of private equity giants – both global and domestic – have taken exposure in the private security services sector. These include names like Standard Chartered Private Equity, DE Shaw, CX Partners, among many others. Domestic companies which have been in news for private equity funding include SIS and Tops Security, among others.

“Growing urbanisation, coupled with retail boom and increasing concerns regarding security has led to a rise of organisations catering to the private security segment in the country,” said Rahul Kapur, Partner, Grant Thornton India LLP. “Development of infrastructure and industries, residential complexes offer a sea of opportunities to the growing security industry. Government initiatives such as the development of 100 smart cities and ‘Make in India‘ campaign will add to the overall growth of the industry,” he added.

“Private securities as a sector is definitely characterised by high growth and that is what is getting increased investor interest in companies operating in this space,” said Rituraj Sinha, promoter at SIS group, which is into providing security guards and cash management services. The company has a joint venture with Spanish security major Prosegur for cash logistics segment, Servicmaster for mechanized cleaning, and pest management services company Terminix.

The sector has witnessed significant M&A activity too with a host of global firms entering the country and partnering with private securities companies. “The Hon’ble Prime Minister’s emphasis on ‘Make in India’ will encourage foreign capital into manufacturing and other such industries,” said A. Didar Singh, Secretary General, Ficci, adding, this will not only trigger demand for private security personnel, but will compel industries to adopt processes and practices in sync with international standards.

Currently, manned guarding is the largest segment in the security space in the country with approximately 75-80 percent market share, the cash services market, which is the next big segment is expected to cover 25 percent of the market share in the next five years.