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Real estate PE funds are different. These funds invest in real estate projects by tying up with the developer, wherein the developer sells a portion of the project to the fund. Some funds tie up with companies also. Most funds operating in India have a lock-in period of three to seven years. At the end of this period, the fund exits the holding by selling it in the secondary market. If the investment is in a commercial property, the fund may rent it out within the lock-in period and exit later. Most funds invest in residential projects and those commercial projects that are nearing completion. While residential projects move faster in the market, there is a rental yield attached to commercial projects. […]
Private equity and venture capital investors have pumped $93 million into 10 education companies so far in 2011 and are bullish about the sector's prospects going forward. According to Venture Intelligence, PE/VC investors have already invested $93 million in 10 education companies so far in 2011, led by a INR 100 crore (about $22 million) investment in vocational training and placement firm Teamlease Services. PE investment in the education sector increased from $129 million in 2009 to $183 million in 2010. Some of the recent large deals in the sector include Premji Invest's $43 million investment in Manipal Education and India Equity Partners' $37 million investments in IL&FS Education and Technology Services. […]
The value of India Inc's merger and acquisition (M&A) and private equity (PE) transactions in the first half of this year touched nearly USD 32 billion, says a report by global consultancy firm Grant Thornton. “There has been a significant level of activity in M&A and PE transactions during the first half of 2011,” Grant Thornton India Partner and National Leader – Valuation Services Srividya C G said, adding that PE investments witnessed a substantial upsurge in comparison to the previous year. While the M&A deal value so far this year is 7% lower in comparison to the same period last year, PE investments have risen by over 70%. The first six months of this year saw M&A deals worth USD 26,743 million, while in the corresponding period last year, the deal value amounted to USD 28,892 million. A notable trend in M&A in 2011 has been the shift from outbound deals to inbound deals. […]
With the initial public offerings (IPO) market drying and debt getting dearer by the day, private equity (PE) has become the lender of last resort for companies. Deals in the space are increasing and getting bigger, as promoters are willing to take a few steps more on the road to reasonable valuation. Avinash Gupta, head, financial advisory, Deloitte India, also feels promoters are more eager to strike deals than in the past. “Promoters feel fundraising will be tougher in the next six months, due to factors such as increased borrowing interest rates and soft share market. They feel this could be the right time for fundraising.” Even funds have become more reasonable in their expectations, leading to more transactions. “Given the fact of high valuation in pre-recession times and thereafter a lack of general conviction to transact, the current time offers a sense of reasonableness for both, the buyer and the seller, resulting in a greater deal flow,” said Abhijit Joshi, senior partner and CEO, Western Region, AZB & Partners.. […]
Sluggish stock markets have helped increase private equity investments significantly in India as several companies that were looking to raise funds from public are now trading the PE route. “Sluggish stock markets have in a way helped the PE investment activity – a number of companies which had filed for IPOs or were looking to raise money on public markets are now actively looking to raise money from PE,” Ernst & Young Partner Private Equity Mayank Rastogi said. Overall, PE investments in India have been growing in the past few years. According to global consultancy firm Grant Thornton, over the past 6 years (2005-2011), they have touched USD 50 billion. In comparison, capital raised through Initial Public Offering ( IPO) in this period was USD 31 billion. Avinash Gupta Leader Financial Advisory, Deloitte in India said, “Whenever public markets go soft, PE has a good time because they have money. Besides, in India, corporate growth is driven on the basis of getting equity and possibly by leveraging it further. So they tap PE.” […]
Club deals, where a consortium of private equity investors get together for a deal to make money, are growing but with a difference. The big-ticket deals are giving way to more ‘growth stage’ transactions. An example of the former is the recent $1-billion investment in Bharti Infratel Ltd by a consortium of private equity investors — Temasek Holdings Pte Ltd, Goldman Sachs, The Investment Corp. of Dubai, Macquarie Group Ltd, Citigroup, AIF Capital and India Equity Partners. It was one of the largest PE investments in India. Such big transactions marked club deals earlier. However, 2011 has witnessed many more club deals under the $100-million (Rs 450 crore) category. Of the 222 deals worth $5.1 billion in 2011 so far, 63 deals worth almost $2.5 bn took place in a co-investment way. Interestingly, out of 63 deals, 53 were below $100 mn in size. […]
Pedigree American venture capitalist Sequoia Capital has bought $30 million stake in Indore-based Prakash Snacks, makers of Yellow Diamond brand potato chips, as large financial investors aggressively chase tier-II food and beverage brands appealing to India's broader consumption story. Sequoia, one of the most influential growth capital providers from silicon valley, is believed to have acquired a significant minority stake in Prakash Snacks, with reported turnover of Rs 250 crore and Rs 30 crore in net profit. The firm is also a supplier of private labels to the country's expanding organized retail industry. Sequoia Capital IndiaMD VT Bhardwaj confirmed the just-concluded $25-30 million investment in Prakash Snacks. Last year, private equity giant Carlyleinvested Rs 102 crore in the South-based Tirumala Milk Products, which started as a small town enterprise at Narasaraopet in Guntur district of Andhra Pradesh. […]
Two recent private equity (PE) deals show how capital has begun flowing to companies in low-income states and smaller cities. In November 2010, Aureos Capital, a mid-market PE firm, invested $10 million (Rs.45.1 crore today) in Apollo BSR Hospital, based in Bhilai, Chhattisgarh. A month earlier, Fidelity Growth Partners invested $20 million in Shreem Electric Ltd, a power equipment and turnkey solutions provider in Sangli, Maharashtra. Aureos, with $1.3 billion under management globally, is looking to make similar investments in low-income states. Balaji Srinivas, managing director of Aureos India Advisors Pvt. Ltd, said: “We are looking for deals in places like Bihar and Orissa. Fifteen per cent of our investment in the new fund will go to such areas.” Chhattisgarh is the 17th largest Indian state by population and accounts for 1.6% of national gross domestic product. Aureos has plans to raise a new PE fund. […]
India is likely to see private equity investments to the tune of USD 10 billion in 2011, especially as more companies look beyond capital markets to meet their funding needs, according to global consultancy E&Y. Sluggish stock market trends and increased investor activities are resulting in higher Private Equity (PE) investments, which was close to USD 4.5 billion till May, 2011. “… the current activity and deal pipeline suggests that we could see similar number as in 2008 (close to USD 10 billion),” Ernst & Young Partner (PE) Mayank Rastogi said about expected private equity investment in 2011. […]
If numbers tell a story, then this is a telling one about private equity exits in India, which are getting difficult even though investments and new funds are picking up. Fathom this: There were 72 PE exits valued at $2,226.61 million in January 1 to June 13, 2010, while the corresponding period for 2011 has witnessed only 47 exits valued at $1,296.21 million. Exits are important for a PE firm, as it allows the firm to generate returns to give back to its limited partners (investors in the fund) and is an indicator of successful fund management. While open market, M&A and secondary exits have all tanked, open market exits have particularly felt the pinch. VCCEdge data reveal there have been just 13 open market exits, valued at $133.82 million, in 2011 — nearly half of the 25 exits for $376 million seen in the corresponding period last year. M&A exits this year were just 12 against 22 deals in 2010 in the corresponding period. […]
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