February 2011
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PE investment slows down to $500 mn in Jan: E&Y

Private equity investment slowed down to $500 million in January over the previous month, says a report by Ernst & Young. Infrastructure companies, however, attracted a major chunk of the PE investment in January, which was lower by 9% over about $550 million in December last year, the report said. “There has been a marginal decline in the aggregate investments during the month compared to last month, but activity remains robust compared to January 2010,” E&Y Partner (Private Equity) Mayank Rastogi told PTI. The total PE investment in January 2010 was $380 million. However, the total number of deals announced during the month was higher than that in both the previous month and January 2010. In January this year, 28 PE deals were announced, against 26 deals in December and 16 in the same month last year. [...]

PE firms bank on tax cover for deal exits

Private equity (PE) firms are taking tax insurance on exits from investments in order to protect themselves from litigation, having been spooked by the recent travails that have beset acquisitions by HSBC and Vodafone. According to tax consulting firms such as KPMG, Deloitte Haskins and Sells and PricewaterhouseCoopers (PwC), and law firms that help PE firms structure the exits, funds are seeking such cover while negotiating the deals. However, they declined to disclose details of such transactions due to client confidentiality agreements. “Funds are actively looking to take some cover regarding uncertainties on the taxation aspect,” said Pranay Bhatia, associate partner at legal firm Economic Laws Practice (ELP). In the past one year, he has worked on at least five exits where such insurance cover was taken. “There is a lot of uncertainty regarding the Mauritius tax treaty protection in the (proposed) direct taxes code, so we want to protect ourselves from any tax exposure,” said a fund manager of a foreign PE fund that invests in India. He declined to be identified. [...]

PE biggies chase healthcare deals

Marquee private equity names are in the reckoning for bigger investments in India's $50-billion healthcare industry. General Atlantic Partners (GAP) and Jardine Rothschild are among the funds that are likely to cut deals with a few emerging healthcare service providers in the coming weeks. General Atlantic, which is shaking off its technology and export focus in India, is holding discussions to buy $100 million, or Rs 450 crore, stake in DM Healthcare spearheaded by Dubai-based medical entrepreneur Dr Azad Moopen. Jardine Rothschild Asia Capital, a private equity joint venture between Jardines and the Rothschilds, is in the fray for $50 million, or around Rs 200 crore, investment in Hyderabad-based Quality Care, which operates a network of 12 hospital under the Care brand. These transactions are part of the ambitious growth capital raising by emerging healthcare networks. Care Hospital-in which the big bull Rakesh Jhunjhunwala and serial entrepreneur and Matrix Labs founder N Prasad are investors-plans to raise Rs 350 crore in equity and debt for doubling beds from 1,700 to 3,200. DM Healthcare is looking at over Rs 600 crore fund-raise to ramp up fast even through acquisitions. [...]

PE fund of funds fading due to changes in investor tastes

Fundraising woes and changing investor preferences are diminishing the influence of private equity fund-of-funds managers. No longer can a fund-of-funds manager's decision whether to invest in a fund make or break that fund. In fact, some insiders estimate that 20% of current fund-of-funds managers might not survive because of fundraising problems. According to Preqin, an alternative investment research firm in London, funds of funds accounted for a mere $10.7 billion of the $225 billion raised worldwide by private equity funds in 2010, the lowest total since 2004. In 2009, funds of funds accounted for $27.4 billion. Private equity funds of funds returned 11.6% for the year ended June 30, according to Preqin. The overall private equity internal rate of return for the year ended June 30 was 19.18%.Industry professionals predict that many funds of funds will either merge, close or change investment strategies. [...]

Baring Private Equity Asia raises $2.46 billion

Largest private equity fund launched in Asia since the global financial crisis; Fund V raised in less than five months; 60 per cent larger than BPEA’s Fund IV which was closed in February 2008. BPEA affiliates now have approximately $5 billion in funds under management, making the group one of the largest dedicated Asian private equity firms. Baring Private Equity Asia (BPEA) has closed the Baring Asia Private Equity Fund V, with $2.46 billion in investor commitments, making it the largest private equity fund launched in Asia since the Global Financial Crisis. BPEA affiliates now have approximately $5 billion in funds under management, making the group one of the largest dedicated Asian private equity firms. Fund V which was raised in less than five months closed at its hard cap and was heavily oversubscribed with more than $1 billion in excess demand. The fund is 60 per cent larger than BPEA’s Fund IV, which was one of the largest regional growth equity funds in Asia when it closed in February 2008 at $1.52 billion. “Further building on BPEA’s successful track record, Fund V will deploy the same investment strategy targeting growing mid-sized businesses in Asia that require capital for expansion, recapitalization or acquisitions. The fund will target companies in a broad range of sectors with operations in Greater China, India, Japan, Singapore, South Korea or South East Asia,” BPEA said. [...]

MONEY MATTERS CALLS OFF JV WITH MILESTONE CAPITAL

Money Matters Financial Services on Saturday said that it has terminated the joint venture (JV) with the private equity firm Milestone Capital. In November 2010, Money Matters Financial Services was accused by Central Bureau of Investigation (CBI) of bribing senior officials of public sector financial institutions to arrange corporate loans. The board of directors of the company at its meeting held on Saturday has terminated the joint venture with Milestone Capital Advisors and has winded-up the special opportunity fund, Money Matters Financial Services, said in a filing to the Bombay Stock Exchange. The board of directors have also cancelled the capital commitment as a sponsor to Money Matters Venture Capital Fund, the filing added. [...]