June 2011
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India likely to see $10 bn worth PE investments in 2011: E&Y

India is likely to see private equity investments to the tune of USD 10 billion in 2011, especially as more companies look beyond capital markets to meet their funding needs, according to global consultancy E&Y. Sluggish stock market trends and increased investor activities are resulting in higher Private Equity (PE) investments, which was close to USD 4.5 billion till May, 2011. “… the current activity and deal pipeline suggests that we could see similar number as in 2008 (close to USD 10 billion),” Ernst & Young Partner (PE) Mayank Rastogi said about expected private equity investment in 2011. […]

Private equity fails to find exit route as volatility complicates timing, valuation

If numbers tell a story, then this is a telling one about private equity exits in India, which are getting difficult even though investments and new funds are picking up. Fathom this: There were 72 PE exits valued at $2,226.61 million in January 1 to June 13, 2010, while the corresponding period for 2011 has witnessed only 47 exits valued at $1,296.21 million. Exits are important for a PE firm, as it allows the firm to generate returns to give back to its limited partners (investors in the fund) and is an indicator of successful fund management. While open market, M&A and secondary exits have all tanked, open market exits have particularly felt the pinch. VCCEdge data reveal there have been just 13 open market exits, valued at $133.82 million, in 2011 — nearly half of the 25 exits for $376 million seen in the corresponding period last year. M&A exits this year were just 12 against 22 deals in 2010 in the corresponding period. […]

PE managers turn entrepreneurs, small-deal market an allure

It seems the small fish is eating the big fish in the private equity industry in India. And why not, when there is more food for thought available for the small fry, thanks to the biggies that choose to ignore! According to reports, private equity in India is a small deal market with the average deal size of a meager USD 26 million. Attractive deals in this market are too small for large global funds who ideally like to make big ticket investments in line with their large fund size. The growing demand for these small ticket transactions in the USD 100-400 million range is prompting top executives from large fund houses to quit and turn entrepreneurs. A KPMG report states that the year 2010 saw the emergence of independent PE fund managers who bring their global expertise into the local arena. Several seasoned PE professionals left their jobs with PE institutions to go independent by setting up their own investment management business. […]

Caparo Energy secures $78.5 m from India Infrastructure Fund

Caparo Energy (India) Ltd, a wholly-owned subsidiary of the AIM-listed Caparo Energy Ltd, today announced that it has secured the first tranche of $78.5 million (Rs 350 crore) funding from The India Infrastructure Fund managed by IDFC Project Equity Company Ltd. It described this as mezzanine financing which is in the form of preference shares with a six-year term. Morgan Stanley acted as the advisor for the transaction. In addition to this, the company hinted that it is at an advanced stage to raise another round of funding of $33.5 million (Rs 150 crore) on similar terms. Caparo Energy (India) has announced plans to set up a series of wind energy farms in the country. Along with its existing resources, the company would be able to set up 700-MW of wind projects, it said. […]

UK's Henderson Equity Picks Up 26% Stake in IPE Global

U.K.-based private equity fund, Henderson Equity Partners, has invested $10 million in Delhi-based development sector consultancy, Infrastructure Professionals Enterprise Global Pvt. Ltd. (IPE Global). It has picked up a 26% stake with the investment from its second Asia Pacific fund. IPE Global, set up 12 years ago by London School of Economics alumni, assists development and aid agencies, public sector clients and not-for-profit organizations in implementing socio-economic projects across the developing world in South Asia, parts of Africa and West Asia. While nearly 80% of the business comes from India, the company is looking at setting up two offices in Africa. Managing director Ashwajit Singh said IPE Global had grown 45% over the last five years and currently employed 300 people. It had revenue of 900 million rupees in the fiscal year 2010-11. […]

ICICI Venture to raise Rs 1,000 Crore for Real-Estate Fund

ICICI Venture Funds Management, the PE arm of private sector bank ICICI Bank, plans to raise around Rs 1,000 crore from high net worth individuals and domestic banks for its second real-estate fund, the India Advantage Fund Two, in the next six to nine months. The fund raised will be invested in residential real estate projects of mid-sized developers in top-tier cities such as Delhi-National Capital Region, Mumbai, Pune, Bangalore and Chennai. ICICI Venture is a leading private equity firm with a corpus in excess of 42 billion, which was raised in 2005 and focused on residential, commercial and mixed land-use projects including Express Tower in Mumbai and IT SEZ in Hyderabad. […]

Narayana Murthy's PE Fund invests in Wellspring Healthcare

NR Narayana Murthy's venture capital firm Catamaran, the Anil Ambani Group's Reliance Venture Asset Management and some foreign investors have invested in Mumbai-based healthcare services provider Wellspring Healthcare. Catamaran, Murthy's $129-million venture capital fund, Reliance Venture Asset Management, US-based BlueCross BlueShield Venture Partners and few angel investors have invested 20.5 crore in Wellspring's first round funding. Mumbai-based Wellspring will use the money to create a chain of clinics under the brand name of 'Healthspring Community Medical centres' in Mumbai and roll it out nationally later. […]

Investor caution may dampen PE funding

One-fifth of all private equity (PE) fund managers globally will struggle to raise money in the next few years as investors have become wary of those without a proven record or sector specialization, according to a Coller Capital report. It also predicts a resurgence in secondary sales—in which investors sell their PE assets to other investors. About 43% of the 110 investors surveyed, known as limited partners (LPs), expect at least 20% of all PE fund managers, known in the industry as general partners (GPs), to be unable to raise a fund within the next seven years, Coller Capital said in its biannual Global Private Equity Barometer report, which was released on Monday. About 38% of LPs expect 10-20% of the GPs to fail. Indian GPs may not face the same hurdles. […]

Flipkart gets $20m VC funding

Bangalore-based flipkart.com, India’s largest online bookstore founded by two former colleagues at Amazon.com — Sachin and Binny Bansal — has now got Series-C VC funding from its existing investor, UK-based Tiger Global, of the order of $20 million to back up its growth plans in India. With the latest round of funds inflow, Flipkart now has a total funding of $31 million. Flipkart has recently acquired weRead.com, the largest social network-based book recommendation and review platform, for an undisclosed sum and also forayed into online sales of electronics, mobile phones and CDs/DVDs of music, movies, games and software. “And the present funding will be used to significantly ramp up supply chain capacity, upgrading technology capabilities and expanding marketing initiatives,” Sachin Bansal, CEO, Flipkart, told Financial Chronicle. […]

PE major eyes $100m stake in L&T Finance

Marquee private equity investor Capital International is leading the race to invest Rs 400 crore, or roughly $100 million, for less than 5% stake in L&T Finance Holdings, which is set for an initial public offering (IPO) possibly within three months. Capital International is in advanced talks with L&T Finance after the company firmed up valuation expectations for the upcoming IPO, sources directly familiar with the development said. L&T Finance, a subsidiary of the $10-billion engineering and construction giant Larsen & Toubro, wants to raise Rs 1,700 crore from the public issue as early as July. […]