A study on private equity investment in public equity (PIPE) of infrastructure companies in India undertaken by SMC Investment Solutions & Services found that the recent slump in the equity market wiped off Rs 2,428 crore of private equity capital. Though the domestic infrastructure sector is regarded as the engine of the country's economic growth, experts say higher valuations at the time of investing and readjustment of the Indian financial markets to global economic environment has impacted the calculations of private equity players. For example, as many as 10 private equity investors, including Eton Fund LP, CITI Group, T Rowe Price and Deutsche Bank, had invested Rs 3,841 crore in in GMR Infrastructure at the rate of Rs 240 per equity share in 2007. The share price of GMR has plunged by 56 per cent to Rs 105.55. As a result, the market value of private equity investment in the company has halved to Rs 1,690 crore. Similarly, Carlyle Group, which invested Rs 158.4 crore in Great Offshore Ltd for Rs 860 per equity share, has witnessed the market value of its holding fall by 30.26 per cent. The stock of Great Offshore last closed at Rs 599.75.   more »

With venture capital (VC) and private equity (PE) investments in India growing, investment banks are emerging as an important link matching companies seeking funds and firms vying for investment opportunities. Experts say up to 40% of investment opportunities are helped by such intermediaries. “Investment banks are crucial as you need a third party during negotiations,” says K.P. Balaraj, managing director, Sequoia Capital India Advisors Pvt. Ltd. Investment banks with large operations such as local arms of the US financial houses such as Merrill Lynch and Co. Inc. or the likes of home-grown Motilal Oswal Securities Ltd typically look for large deals—say, above $20 million (Rs86 crore) each. Professional services firms such as Ernst and Young and KPMG International, too, have large corporate finance teams. And, Yes Bank Ltd, IDBI Bank Ltd and ICICI Bank Ltd are among a growing breed of lenders with their own investment arms. But, it is the boutique investment banks and specialists such as Spark Capital or Veda Corporate Advisors Pvt. Ltd that are gaining custom from start-ups and firms with small investment needs. Others active in the PE and VC business include Avendus Capital, Edelweiss Capital Ltd, Cipher Capital Advisors Pvt. Ltd, Mape Advisory Group and o3 Capital Advisors Pvt. Ltd. An investment bank’s job begins with screening companies, which are then introduced to VC and PE players.   more »