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Private Equity exits up 38% in April-June 2013: Venture Intelligence

The exit of private equity (PE) firms from their investee companies has shown an upward trend in the quarter ended June 2013, with exits were reported from 29 Indian companies as against 21 exits during the same quarter of last year marking an increase of 38%, says research service firm Venture Intelligence.

The Initial Public Offering (IPO) of internet-based search firm JustDial has fetched over 10x return for one of its PE investor SAIF, while exit of PE investor TPG from Shriram Transport Finance gave the PE a return of over 6x.

The research firm said that the sale of shares in already listed companies through the public markets accounted for nine exits during April to June 2013 as compared to four in the same period in 2012. Of the exits during the quarter ended June, 2013, there were 21 complete exits while the remaining were partial exits.

Sale of shares in already listed companies (via the public markets) accounted for nine exits during Apr-Jun ’13 (compared to four in the same period in 2012). There were seven strategic acquisitions during the quarter as against six in the same period of last year, secondary sales, which is a PE firm acquiring shares from another PE firm, accounted for six exits as against seven during the quarter ended June, 2012.

The number of buybacks were six during the quarter as compared to four in the same quarter of last year. However, these are the figures excluding exits in the real estate segment, added the company.

The only PE-backed IPO during the quarter, that is of JustDial, provided a healthy exit for its investors SAIF, Tiger Global, Sequoia Capital India and SAP Ventures whose sale of shares comprised over 80% of the Rs 927.37 crore ($167.11 million) issue.

“At the IPO price, SAIF was sitting on an over 10x return on its investment; Tiger Global, 7.3x; Sequoia Capital India, over 2x and SAP Ventures, 1.3x. The JustDial IPO marks the second successful Indian “Internet play” brought to the public markets by SAIF, following the Nasdaq IPO of MakeMyTrip in August 2010,” said Venture Intelligence. The shares, which provided JustDial a market capitalization of $667 million at the IPO price of Rs 530, were trading 20% higher at the end of the quarter.

The largest public market sale fetching a complete exit was the sale of Rs 1,652 crore worth shares in truck finance firm Shriram Transport Finance Company (STFC) by TPG.

With the sale of its final 10% holding in STFC, TPG realised an over six times on its Rs 547 crore investment in STFC starting in Feb 2006. Another complete exit through the public markets during the quarter was that by Warburg Pincus from Havells India with returns of about 2.5x on its Rs 484 crore investment made in Oct-07.

The partial exits through public market route include, Apax Partners selling Rs 128 crore worth of shares in Apollo Hospitals, and ICICI Venture and Norwest started selling their holdings in Non Banking Finance Company (NBFC) Shriram City Union Finance.

Secondary Sale transactions during April to June 2013 includes Warburg Pincus selling shares to KKR in the $460 million buyout of the off-highway tires focused Alliance Tire Group. The $270 million buyout of the existing PE investors – SAIF, Goldman Sachs and Sierra Ventures – in IT Services firm CSS Group marked the first direct investment in an Indian company by Partners Group.

In Venture Capital exits, the strategic sale of online bus ticketing service firm redBus to South Africa-based Naspwers for $100 million was one of the major deals. The bus ticketing firm has raised about $9.3 million from investors including Seedfund, Inventus Capital and Helion Ventures, starting from July 2007.

Six out of the seven Strategic Sales were of VC-backed IT companies including that of online marketing services firm WebChutney (sale by Capital18 to ad agency Japanese ad agency Dentsu) and the acquisition of another of Nexus Ventures’ US-based portfolio companies – mobile productivity apps firm Astrid – by Yahoo. The only non-IT exit through strategic acquisition was Turkey’s Trakya Cam Sanayii acquisition of IFC’s stake in glass maker HNG Float Glass for $12 million, added the research firm.

The real estate sector witnessed five buybacks by promoters from the PE firms. IL&FS Investment Managers (IIML) sold its stake in Bhartiya City, a 125 acre integrated township project in Bangalore for Rs 325 crore. IIML had invested Rs 150 crore for a 26% stake in 2007 by way of compulsorily convertible preference shares.

Godrej Properties bought back the stake held by HDFC PMS in two of its projects – 49.9% stake in a Chennai project in which it invested Rs 55 crore starting in March 2010 and another 49% in Chandigarh commercial project in which it invested Rs 45 crore starting from March 2010.

Mean while, real estate firm Parsvnath Developers said that it has repatriated Rs 34.56 crore to PE investor Sun Apollo from its Gurgaon residential project even as ICICI Prudential PMS exited its investment in Shriram Properties’ Shriram Sahaana and Suhana residential projects in Bangalore with an average return of about 24.5% (across two of its funds), added Venture Intelligence.
Source: Business Standard

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