Private equity investments in listed firms have lost nearly $1 billion so far this year largely due to the ongoing downturn in the capital market.
An analysis of private investment in public equity (PIPE) in 2008 shows that these deals in the country have lost funds to the tune of $0.89 billion till January 12 this year.
The PIPEs of 2008 have lost about 53.29 per cent from their investment of $1.67 billion to current mark to market value of $0.78 billion, representing an absolute loss of $0.89 billion, Nexgen Capitals, the merchant-banking arm of brokerage firm SMC Global Securities, said in its latest report.
“The loss suffered by these PIPE investments was largely due to the fact that market meltdown was significant, besides expectation of PE funds that market correction was a short term phenomenon went wrong,” SMC Capitals Equity Head Jagannadham Thunuguntla said.
An industry-wise analysis shows that wealth erosion was all pervasive across the sectors.
There were as many as 30 PIPE deals in the year 2008. Out of those 30 deals, 93 per cent or as many as 28 were in losses while only two deals amounting to seven per cent of the total deal volume registered gains.
The two deals that recorded gains were from the oil & gas and the media sectors.
Source: Business Standard