As valuation of Indian companies have improved with the recovery in the stock market, a number of private equity players are offloading their stakes and such exits have shot up nearly 30 per cent in the first seven months of 2009.
Till July this year, India Inc saw as many as 31 deals where the PE firms sold their stakes in domestic companies – an increase of 29 per cent over the corresponding period a year ago. In the comparable period there were 24 such deals, according to data compiled by the deal-tracking firm Venture Intelligence.
“PE firms which are currently exiting, invested in Indian companies way back in 2004-05. With the recovery in the stock market, they are now finding valuations attractive and are selling stake,” Venture Intelligence CEO Arun Natarajan said.
Marketmen said there were apprehensions that PE players might find it difficult to offload their holdings in companies due to high volatility in the stock market.
But with the equity market surging 62.43 per cent till July this year, an increasing number of PE firms were preferring public market sales route to cash in on their holdings, they said.
PE investments in 2004-2005 – including Warburg Pincus (Max India), Citi (Lupin Labs, HT Media) ChrysCapital (Shriram Transport), StanChart PE (Aurobindo Pharma) – have been exiting their stakes via the public markets at significant multiples of the investment.
Source: Economic Times