http://www.indiape.com/blog INDIA PRIVATE EQUITY - Private Equity information for investors looking at Indian Private Equity space en-us Thu, 08 Jan 2009 00:17:21 +0530 General Blogware www.indiape.com http://www.indiape.com/blog/_archives/2009/1/7/4048811.html http://www.indiape.com/blog/_archives/2009/1/7/4048811.html Wed, 07 Jan 2009 14:09:36 +0530 The Satyam story poses a big question over the credibility of auditors in general, as PricewaterhouseCoopers was auditor of the company. The bankers to Satyam included Bank of Baroda, BNP Paribas, ICICI, HDFC, Citi Bank, HSBC. Anita Gandhi, head-institutional business, Arihant Capital, said, “The Indian technology industry was a very important driver for the country's stock market for nearly a decade. Satyam's fraud is expected to lead a severe blow to the entire industry with investors being more cautious going ahead. This raises serious questions on the entire due diligence process conducted by the auditors of Satyam. What is more surprising is the chairman's confession after his resignation. This means, all along, he did have vested interest in keeping the investors in darkness.” Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2009/1/1/4041932.html http://www.indiape.com/blog/_archives/2009/1/1/4041932.html Thu, 01 Jan 2009 17:22:26 +0530 Private equity (PE) funds slowed their investments in India during 2008 but say they aren’t averse to so-called buyout deals that allow them to take control of a company by buying at least 50% stake. This preference for buyout deals will accelerate in 2009, predict PE investors. Nexgen Capitals Ltd, the investment banking arm of New Delhi-based financial services house SMC Global, notes that that 13 such buyout transactions took place in 2008, up from 11 in 2007. Meanwhile, deals data from consultant Grant Thornton adds up to $17.14 billion (Rs83,129 crore today) worth of total transactions that year, at least 118% more than 2006. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/26/4035660.html http://www.indiape.com/blog/_archives/2008/12/26/4035660.html Fri, 26 Dec 2008 13:28:41 +0530 Although they’re not buying, private equity (PE) firms aren’t panic-selling either. The number of investment exits or selloffs by PE and venture capital (VC) firms dropped by a whopping 70% to just 12 companies during April-December from 60 companies in the corresponding period last financial year, according to data compiled by Venture Intelligence, a firm that tracks PE and VC developments in India. In terms of value, PE firms encashed $750 million through exits this fiscal as against $1.7 billion during the nine-month period last year. The exits have primarily been in the IT/ITeS, manufacturing and healthcare and lifesciences sectors. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/23/4033306.html http://www.indiape.com/blog/_archives/2008/12/23/4033306.html Tue, 23 Dec 2008 22:28:39 +0530 Private equity (PE) deals in India may further slow down in 2009 as raising funds is getting tougher and marginal players are feeling the pressure of exits. According to Grant Thornton, the global accountancy firm, the value of PE deals is expected to shrink over 40 per cent during 2008. Between January and December 15, 2008 the value of PE deals was estimated at $10.42 billion, as against $19.03 billion in 2007. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/17/4024497.html http://www.indiape.com/blog/_archives/2008/12/17/4024497.html Wed, 17 Dec 2008 11:15:15 +0530 FDI inflows declined 26% in October this year compared to the same month last year, commerce minister Kamal Nath told the Lok Sabha on Tuesday. Experts attribute this fall after seven months of robust growth to the drying up of investments from countries hit by the global slowdown. The inflows in September 2008 had registered a steep growth of 259% to $2.56 billion against $713 million in September 2007. In contrast, the figure for October 2008 fell to $1.49 billion compared to over $2 billion in October 2007. However, experts caution that a part of the October decline could also be attributed to a higher base in 2007 as FDI flow during the month was almost three times higher than in September 2007. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/12/4017554.html http://www.indiape.com/blog/_archives/2008/12/12/4017554.html Fri, 12 Dec 2008 13:23:43 +0530 Debt funding for new infrastructure projects is facing bottlenecks with private equity (PE) funds exiting from investment commitments. Banking sources said that only the existing pipeline sanctions were being disbursed. However, banks are not prepared to release debt funds to some planned power projects, including ultra mega power projects. This is because promoters have relied substantially on PE funds. PE funds, in the past, had resorted to using leveraged buyouts. This implied using borrowed funds for acquiring equity stakes in new projects. PE funds had committed equity funding in some projects up to 49 per cent. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/12/4017549.html http://www.indiape.com/blog/_archives/2008/12/12/4017549.html Fri, 12 Dec 2008 13:18:10 +0530 With traditional sources of finance in short supply, most Indian companies, including leading corporate houses, are turning to private equity to raise capital. Private equity is looking more attractive as factors like the ongoing credit crunch, tighter lending norms imposed by banks and slowing demand have forced companies to prioritise their capex plans. According to a cross-section of big ticket PE firms ET spoke to, PE investments could gross $10-12 billion in the next financial year. While this may be less than the previous year, it is a substantial amount in the middle of a global downturn. Investments would start flowing once promoters begin to align valuation expectations to the corrections in the market, officials at a number of PE firms said. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/11/4016396.html http://www.indiape.com/blog/_archives/2008/12/11/4016396.html Thu, 11 Dec 2008 19:17:17 +0530 Investor commitment to private equity as an asset class has not wavered, Coller Capital's latest Global Private Equity Barometer finds. The vast majority of LPs (97 per cent) will maintain or increase their allocations to private equity. A total of 40 per cent plan an increased allocation, a proportion unchanged since the boom years. All that is despite the fact that two thirds of LPs will have little or no 'headroom' for new fund commitments by this time next year, according to the Barometer. North American LPs will be particularly stretched, with 28 per cent of them expecting to be over their allocations by December 2009. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/6/4008989.html http://www.indiape.com/blog/_archives/2008/12/6/4008989.html Sat, 06 Dec 2008 11:56:37 +0530 As private equity (PE) firms find it difficult to raise capital in difficult economic times, they are offering limited partners (LPs) more incentives to put in their money. Making the most of the situation, LPs are now demanding a greater say in the use of and returns on the money they commit to PE firms. LPs are entities that include public and corporate pension funds, insurance companies, high net-worth individuals, and university and other endowments that are the source of money for PE firms, which then establish funds to invest. PE fund investors Mint spoke with said LPs have collectively turned cautious, are demanding more rights, and subjecting those raising funds to intense scrutiny. “LPs are now negotiating terms on the fee and share of profits that the fund can take home,” said Sandeep Aneja, chief operating officer and managing director of Milestone Capital Advisors Pvt Ltd, a Mumbai-based real estate fund that is raising a $400 million fund from overseas, and has commitments of $220 million. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/12/1/4003003.html http://www.indiape.com/blog/_archives/2008/12/1/4003003.html Mon, 01 Dec 2008 22:27:42 +0530 Private equity major Actis has raised a $2.9 billion private equity fund - Actis Emerging Markets 3 (AEM3) - for emerging markets of Africa, China, India, Latin America and south-east Asia. This is one of the emerging markets private equity funds closed this year and doubles the amount raised by Actis in 2004. The new fund will invest $1 billion in India over a period of 3-4 years. AEM3 includes commitments from a group of 100 investors from across the globe, including a number of first time investors in emerging markets. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/28/3999128.html http://www.indiape.com/blog/_archives/2008/11/28/3999128.html Fri, 28 Nov 2008 21:07:27 +0530 The terror attacks that rocked India's financial capital may depress stocks, dampen tourism and slow new investment, but are unlikely to inflict long-term damage on the nation's economy, analysts and business people said Thursday. "This is a challenge for the government to maintain law and order in the country," said Takahira Ogawa, director of sovereign ratings at Standard & Poor's in Singapore. "At this stage, I don't think there will be any major impact on the macroeconomic or fiscal position of the government."Indeed, Mumbai has a long history of terror attacks -- and has managed to bounce back from them. A series of bombings in July 2006 killed 187 people. Chandiok said Indian companies are going to have to take security issues more seriously going forward, and Grant Thornton's India office has already begun a review of its policies. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/28/3998569.html http://www.indiape.com/blog/_archives/2008/11/28/3998569.html Fri, 28 Nov 2008 13:23:31 +0530 The global economic downturn notwithstanding, venture capital (VC) investments have continued to flow into India and China, with both countries witnessing a significant surge in the third quarter this year. According to a study by research firm Venture Intelligence, VC investment in India grew by 36 per cent at $290 million for the third quarter ended September 30. Meanwhile in mainland China, VC investments grew by 22 per cent to $964 million at the end of the third quarter, as per data by Dow Jones VentureSource. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/26/3995983.html http://www.indiape.com/blog/_archives/2008/11/26/3995983.html Wed, 26 Nov 2008 20:31:02 +0530 As buoyancy transformed into nightmare in the global financial market, Indian private equity players, for whom the exit through initial public offer (IPO) seems impossible, are exploring the ways to find an exit from their investments. Secondary deals, exercising drag-along rights and stake sale to FIIs, all of which are not so common in Indian PE scenario, are expected to increase in the recent future as floating IPO by the companies remain a fantastic idea in the current market tumble. In 2007, about 95 IPOs were floated, out of which 16 PE players made the exits. However, this year, as of today, about 9 PE exits were made out of a total of 36 IPOs. Two months back, through a secondary deal, Azim Premji had bought a 10% stake in Subhiksha. This transaction was done by Premji’s personal investment entity Zash Investments Ltd from ICICI Ventures, a private equity arm of ICICI Bank. Subhiksha has indefinitely deferred its IPO plan. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/26/3995982.html http://www.indiape.com/blog/_archives/2008/11/26/3995982.html Wed, 26 Nov 2008 20:29:11 +0530 In October 2007, Bangalore-based developer Nitesh Estates tied up with Citigroup Property Investors, the real estate private equity (PE) arm of Citigroup Inc., to set up shopping malls worth around $300 million (about Rs1,180 crore then) in Thiruvananthapuram, Chennai, Kochi and Bangalore over the next three-four years. Now, Nitesh Estates is looking for another partner or investor for the shopping mall venture, a senior company official said on Monday on condition of anonymity, because the decision to tie up with another entity hasn’t yet been made. Citi received a bailout on Sunday under which the US government agreed to protect the largest US bank from hundreds of billions of dollars in toxic assets and infused $20 billion of fresh capital. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/24/3992459.html http://www.indiape.com/blog/_archives/2008/11/24/3992459.html Mon, 24 Nov 2008 18:51:27 +0530 However, it is not only the real estate and auto sectors that are witnessing a slowdown; the entire industry is facing a liquidity crisis. In ’08, PE deals slowed down for the first time in July in terms of numbers as well as value. The total number of deals in the first seven months of ’08 stood at 215, against 224 in the first seven months of ’07. Though PE deals have slowed down, certain PE funds still feel there is value in several companies. The recent Rs 12,960-crore PE stake sale in Tata Teleservices to Japanese firm NTT DoCoMo proves that certain promising business models still exist even today and one can make the best of it. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/21/3987807.html http://www.indiape.com/blog/_archives/2008/11/21/3987807.html Fri, 21 Nov 2008 14:24:49 +0530 Though private equity (PE) players in India are in a wait-and-watch mode, a few of them are ready to explore the opportunities from which they can reap amid turmoil. Reliance Equity Advisors Ltd (REAL), the PE arm of Anil Dhirubhai Ambani Group (ADAG), is betting big on the secondary deals in the PE space in India. Through these deals, which are not common in India, a PE player can buy the investment or stake, which was earlier primarily done by another PE firm. Previous, in the buoyant market, exits through initial public offer (IPO) route were common. As the situation worsens, companies are keeping aside their IPO plans, which made the exits for PE players difficult. In 2007, about 95 IPOs were floated, out of which 16 PE players made exits. However, this year, out of a total of 36 IPOs, only about nine PE made exits Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/17/3982142.html http://www.indiape.com/blog/_archives/2008/11/17/3982142.html Mon, 17 Nov 2008 22:24:24 +0530 The economic slump may have slowed down the overall private equity investments scenario, but relatively more PE deals are being struck in the emerging businesses space. In the third quarter, including mergers & acquisitions, private equity and venture capital deals were on a decline. However, over 40% of the total deals happened in the emerging companies (SMEs and midcaps). The percentage of the same was only 25% in the last quarter. Interestingly, of the total 12 PE deals in October, six (50%) can be categorised as emerging companies. According to figures obtained from Grant Thornton, the announced value of all the 12 deals stood at $372 million. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/17/3982082.html http://www.indiape.com/blog/_archives/2008/11/17/3982082.html Mon, 17 Nov 2008 21:52:33 +0530 Start-up health care and drug technology firms are struggling to attract funding as venture capital and private equity firms shy away from high-risk projects with long gestation periods in the wake of the global economic downturn. The early exits in June of Citigroup Venture Capital International and ICICI Venture Funds Management Co. Ltd from Perlecan Pharma Pvt. Ltd, the drug discovery and development company of Dr Reddy’s Laboratories Ltd, due to risk apprehensions were just the beginning, industry experts say. In October, Piramal Life Sciences Ltd, the newly constituted drug research firm of Piramal Healthcare Ltd, had to put on hold its plan to raise funds from private equity firms as it could not attract investments at the valuation it had anticipated. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/17/3982078.html http://www.indiape.com/blog/_archives/2008/11/17/3982078.html Mon, 17 Nov 2008 21:47:54 +0530 Private equity (PE) investments in India have declined by 72 per cent to $9.67 billion till October, largely due to global financial turmoil. The total number of PE deals during the first 10 months of 2008 stands at 274, with an announced value of $9.67 billion as against 328 deals amounting to $13.43 billion during the corresponding period in 2007, global consulting major Grant Thornton said. "Private equity investments in India are showing some amount of slowdown, considering that a considerable amount of investments have been coming from international funds, which are in turn funded by international banks or investment banks," Specialist Advisory Services Partner CG Srividya said. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/15/3978608.html http://www.indiape.com/blog/_archives/2008/11/15/3978608.html Sat, 15 Nov 2008 15:23:44 +0530 The Foreign Investment Promotion Board (FIPB) has ruled that foreign investment can flow into private equity funds registered as trusts. The move opens up another window of funds for private equity players and venture capital funds registered as trusts. The department of industrial policy & promotion (Dipp) was opposed to FDI in trusts, but FIPB has overruled the argument. This can lead to a new channel of investment for India Inc, especially start-ups. The FIPB’s view is that FDI can be permitted in trusts which intend to carry out PE investments, provided they register themselves as VC funds. Following the FIPB ruling, Dipp is now planning to introduce guidelines for allowing FDI in trusts that invest in companies, especially start-ups, with the aim of long term capital gains. Apart from mandatory registration with capital market regulator Sebi, the foreign investor will also have to comply with the know-your-customer (KYC) guidelines, a Dipp source said. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/15/3978603.html http://www.indiape.com/blog/_archives/2008/11/15/3978603.html Sat, 15 Nov 2008 15:19:19 +0530 A double whammy of adverse market conditions and a depreciating rupee is expected to hasten the consolidation process within the private equity (PE) and venture capital (VC) space, say industry watchers. Many foreign players are likely to exit their investments altogether in the country, they point out. Alok Aggarwal, chairman and founder of Evalueserve, a firm that tracks PE and VC firms, expects nearly 20% of foreign PE and VC firms to pull out. “Out of 370 PE and VC firms active in India, about 260 are foreign players. With the financial market meltdown and rupee depreciation having dealt major blows to the PE industry, we expect 60 to 70 of them to exit the country within next 12 months,” he told ET. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/15/3978592.html http://www.indiape.com/blog/_archives/2008/11/15/3978592.html Sat, 15 Nov 2008 15:08:59 +0530 Venture capital funds and private equity players continue to scout for investments in the Indian infrastructure sector but await Government initiatives to speed up investments, according to venture capital industry players. While there is continued interest from US and European investments funds in wide-ranging areas within infrastructure including airports, ports, roads and power projects, they want the Government, which is the main investor, to make first move. However, they warn that the overall investment during 2008 will come down compared to last year. While the exit options have come down due to market situation, the size of the deals and number of transactions will be lesser as investors are in a consolidation and wait and watch mode, according to Mr Sudhir Sethi, Founder and Chairman and Managing Director of IDG Ventures India. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/14/3977287.html http://www.indiape.com/blog/_archives/2008/11/14/3977287.html Fri, 14 Nov 2008 20:23:30 +0530 PE firms are aggressively topping up earlier investments made in listed companies at a time when valuations are at a fraction of what they were a year ago. Among the big firms scooping up equity in listed entities to average out costs are ChrysCapital and Singapore-based Orient Global which have made direct secondary market investments. Also See Value Adds “There are some very attractive valuations. The corrections have taken place and depending on our investment thesis, we have an opportunity to take a position in listed companies, and top it up, too,” said Sanjiv Kaul, managing director of ChrysCapital, while declining to provide further details. Others such as Standard Chartered Private Equity Ltd and Blackstone Group Lp. have also been buying, the only difference being that these have had some promoter-level engagements at an earlier stage. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/10/3970871.html http://www.indiape.com/blog/_archives/2008/11/10/3970871.html Mon, 10 Nov 2008 18:37:09 +0530 The financial meltdown has dampened the merger and acquisition spirit in India with companies and private equity (PE) players adopting "extreme caution" in dealmaking. The sudden market crash in the face of a liquidity crunch has impacted M&A plans with some deals even falling apart. Experts at top consultancy firms told TOI that the current sentiment in the M&A space was of "wait and watch" with no company in a hurry to rush through deals. "There are a lot of people who are sitting on cash. But most are in a wait-and-watch mode and are taking time to decide," Pankaj Karna, Head M&As at Grant Thornton, said. Karna said while good companies are generating interest among suitors, the meltdown had seen the collapse of many deals-in-the-making. "There has been a good excuse for investors to re-negotiate... We have come across situations where due to the changed market conditions, people got cautious and held off (from previously negotiated deals)," Karna added. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/10/3970868.html http://www.indiape.com/blog/_archives/2008/11/10/3970868.html Mon, 10 Nov 2008 18:33:34 +0530 The world's leading private equity firms are reassessing how they invest in India after racking up huge paper losses buying stakes in listed companies. Firms have struggled to deploy capital in India in recent years because of the unwillingness of familyrun companies to sell control, and limits on leverage. The situation led to a huge increase in private investments in public equity, or so-called "Pipe" deals, as private equity firms sought exposure to companies that were among the world's fastest growing. However, the amount invested in Pipe deals has fallen sharply amid the collapse in company stock prices in the wake of the global financial crisis. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/7/3966322.html http://www.indiape.com/blog/_archives/2008/11/7/3966322.html Fri, 07 Nov 2008 15:49:30 +0530 India and Oman are expected to soon launch a $100 mn joint investment company on equal partnership basis to facilitate cooperative projects in various sectors through investments. "The potential is very high for expanding business cooperation," Omanese Ambassador Humaid Al-Maani told here ahead of the long-overdue visit of Singh to his country on Saturday. The two countries have set the two-way non-oil and non-gas trade target of $2 billion by the end of this year, which the Ambassador said could be raised in view of the existing potential. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/7/3966304.html http://www.indiape.com/blog/_archives/2008/11/7/3966304.html Fri, 07 Nov 2008 15:36:47 +0530 The Reserve Bank of India, which has been holding back applications of several foreign venture capital funds (VCFs) for a few years, is slowly opening the doors to these investors — a decision which could be partly driven by the dollar shortage following the FII outflow. During the last fortnight, the central bank has cleared proposals of as many as 10 foreign VCFs which are adequately capitalised. Many VCFs were setting up entities in Mauritius with only a few thousand dollars as the overseas investors in the funds were reluctant to park the money in Mauritius before the regulatory clearance. This was unacceptable to RBI. Indeed, RBI had returned more than 16 foreign VCF applications to Sebi citing ‘under-capitalisation’ as the reason. After this, several foreign VC funds began capitalising the investment company before approaching the financial sector regulators. Sources said Sebi has already issued the in-principle approval to 10 applicants. However, while clearing the cases, RBI has inserted a new clause, which restricts investments by these foreign funds to certain sectors, similar to those prescribed under the Income Tax Act for availing of a tax pass-through for Sebi-registered VCFs. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/11/3/3960490.html http://www.indiape.com/blog/_archives/2008/11/3/3960490.html Mon, 03 Nov 2008 17:20:21 +0530 The merger and acquisition (M&A) spree of corporate India seems to have hit a low, as India's share in the global M&A tally, which touched a whopping $3 trillion, is less than even one per cent. Till September this year, corporate India has announced merger and acquisition deals worth $26.43 billion, which is around 0.8 per cent of the total global M&A kitty. Commenting on the current market situation, KPMG Executive Director (Corporate Finance Group) Gaurav Khungar said: "The environment is plagued with conservatism and a wait-and-watch approach with absence of decision making or aggression... And questions on prospective bankruptcy risks are abound." Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/10/31/3955482.html http://www.indiape.com/blog/_archives/2008/10/31/3955482.html Fri, 31 Oct 2008 14:24:23 +0530 Private equity (PE) deals in the real estate and infrastructure space grossed about $3 billion in value during the first nine months of 2008, over 9 per cent lower than the year-ago period. Moreover, PE investors, who had been cherry-picking realty deals earlier this year, appear to have tightened their purse strings now, with September seeing only two transactions worth $12 million compared with August, when $427 million of PE funds was infused into various projects. According to data compiled by Grant Thornton, while the number of deals during January-September was higher at 45 against last year’s 39 deals, the average ticket size of the transactions has come down substantially in the first three quarters of 2008, reflecting softening valuations across the crisis-ridden real estate sector. Realty companies have been facing a severe cash crunch with bank loans drying up. Their problems have been compounded by plunging sales and weak demand. Main Page General www.indiape.com http://www.indiape.com/blog/_archives/2008/10/27/3949667.html http://www.indiape.com/blog/_archives/2008/10/27/3949667.html Mon, 27 Oct 2008 19:44:24 +0530 One of the largest global private equity (PE) fund was close to finalising a deal with a north-based company. However, following the changes in the global economic environment, the fund’s US-headquarters instructed the Indian arm to go slow over the deal citing concerns over the falling valuations. There are many such instances where deals are taking a longer time to close or at times PE firms are going back on their commitments. Compared to the first nine months of last year, this year has seen a dip in the number of transactions as well as the ticket size. Private equity firms have begun to cherry pick on deals and are becoming cautious in their investment strategy, unlike in the past where there was too much money chasing such deals. Main Page General