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It seems the small fish is eating the big fish in the private equity industry in India. And why not, when there is more food for thought available for the small fry, thanks to the biggies that choose to ignore! According to reports, private equity in India is a small deal market with the average deal size of a meager USD 26 million. Attractive deals in this market are too small for large global funds who ideally like to make big ticket investments in line with their large fund size. The growing demand for these small ticket transactions in the USD 100-400 million range is prompting top executives from large fund houses to quit and turn entrepreneurs. A KPMG report states that the year 2010 saw the emergence of independent PE fund managers who bring their global expertise into the local arena. Several seasoned PE professionals left their jobs with PE institutions to go independent by setting up their own investment management business. […]
One-fifth of all private equity (PE) fund managers globally will struggle to raise money in the next few years as investors have become wary of those without a proven record or sector specialization, according to a Coller Capital report. It also predicts a resurgence in secondary sales—in which investors sell their PE assets to other investors. About 43% of the 110 investors surveyed, known as limited partners (LPs), expect at least 20% of all PE fund managers, known in the industry as general partners (GPs), to be unable to raise a fund within the next seven years, Coller Capital said in its biannual Global Private Equity Barometer report, which was released on Monday. About 38% of LPs expect 10-20% of the GPs to fail. Indian GPs may not face the same hurdles. […]
Private equity funds with real estate focus, many of which are nearing maturity, are in a dilemma: while investment valuations in the sector look good, they are not generating the returns promised to investors. Most of these funds promised 25% returns post-tax, but have been ticking at an average 15%. “This is the right time to invest in real estate for PE funds if they are willing to take risk and think outside metros as the valuations are attractive — but it is the wrong time to raise funds,” said the CEO of one of the top RE funds headquartered in Mumbai. Analysts say high property prices limit the growth of investment, but the desperate need of developers for liquidity boost their bargaining capacity. […]
Nearly three years after raising a record $100 million from private equity funds to expand its presence in multi-specialty expansive hospitals in 5-6 cities in India, Narayana Hrudayalaya is once again tapping the private equity route to expand its presence in the neighbourhood speciality clinics space. Riding the wave of PE fund raising by Vasan Healthcare, MedPlus and Metropolis, Narayana Hrudayalaya is looking to raise $15 million to expand its network of dental clinics to start with. The company had earlier stated it will spend around Rs 150 crore over the next couple of years to expand presence in this space. Narayana Hrudayalaya, in fact has set up a wholly-owned subsidiary for this foray and in addition to dental clinics, the company is also looking at cosmetology and may at a later stage look at eye-care and birthing centres. […]
Indians' obsession with schooling combined with woeful public education and rising incomes has private equity firms on the hunt for scarce opportunities in the country's booming but fragmented for-profit education sector. Deals tend to be small in the highly regulated industry. The Indian education sector saw 11 private equity investments worth a combined $130 million in the first four months of 2011, putting it on track to surpass last year's $261 million raised from 25 deals, according to a report by Kaizen Private Equity. Recent deals include a 1 billion rupee ($22 million)investment in staffing and vocational training firm Teamlease by Indian funds Gaja Capital and ICICI Ventures, the $2 billion private equity arm of No. 2 lender ICICI Bank . New Silk Route, which runs a $1.3 billion fund focused on the Asian consumer sector, has made one investment in Indian education and is hoping to close its next investment in the vocational or test prep segment in the coming six months, said partner Jacob Kurian. […]
Private Equity (PE) and Venture Capital (VC) investments, which are major contributors in development of several sectors in the country, are likely to touch $70-75 billion till 2015, leading audit and advisory firm Grant Thornton said today. “We expect $70-75 billion of PE and VC investments in India during 2010-2015,” Sudhir Sethi, founder, chairman and managing director, IDG Ventures India and member of IVCA Executive Committee and Research and Data Sub Com told reporters here after the launch of 'The Fourth Wheel'. 'The Fourth Wheel' is a report on PE and Venture Capital (VC) in India, jointly prepared by Grant Thornton and India Venture Capital Association (IVCA). Grant Thornton India Partner, leadership team, Harish HV said PE funds had now crossed $50 billion over the last six years and 2010 alone saw $6 billion fund flow. […]
High valuations are making it tough for private equity (PE) fund managers to deliver expected returns to investors. “We are not seeing fund level returns, even though PE in India is today a decade-old industry,” said Anubha Shrivastava, managing director-Asia of CDC Group, the development finance institution of the UK government that has so far invested at least $1 billion across 17 funds. “LPs (limited partners that invest in PE funds) expected net return of 20-25%, but today deals are being done at high valuations, bringing in the net returns to mid teens.” The pace of PE exits in India has shot up; in 2010, there were exits to the tune of $5.3 billion, a fivefold jump over 2009, according to Venture Intelligence, a research service focused on private equity, mergers and acquisitions. This appears to be due to heightened competition among PEfunds, with close to 300 of them jostling for deals. […]
Many large private equity (PE) firms that have raised millions of dollars to invest in India’s infrastructure have struck at least one deal in the road sector this year—a rarity four years ago when the PE market was at its peak. In the first five months of this year, PE firms pumped in $407 million (Rs.1,823 crore) in road projects, double the $200 million they invested in the sector in all of 2007, show data from Venture Intelligence, a research service focused on PEs and mergers and acquisitions. Last year, the sector attracted $274 million in investments. The largest deals in road projects were done through joint ventures (JVs). […]
Gujarat-based mid-sized private enterprises with a turnover of around Rs 200 crore seems is becoming favourite for the foreign private equity (PE) investors. Some of the leading global private equity funds have initiated talks with the private companies in Gujarat having operations in the automobiles, auto ancillary manufacturing and real estate. Around seven to ten mid-sized companies from Gujarat are likely to get foreign funds via PE route. “The talks are underway and we are at different stages of talks with foreign PE funds. The investments are believed to be in the range of Rs 100 crore to Rs 200 crore with PE funds staying invested for a long term period of about four to seven years,” said Ashesh Shah, managing director, Trans-Continental Capital Advisors (TCCA) – a Mumbai-based financial advisory firm. However, he declined to reveal names of the companies or the PE funds interested to invest in them. […]
The Securities and Exchange Board of India is likely to raise the trigger limit for open offer to 25 per cent when it takes a decision on the new Takeover Code for mergers and acquisitions at its board meeting scheduled later this month. “SEBI is likely to clear the Takeover Code in its board meeting scheduled on June 30,” an official said. An agreement seems to have emerged between the Finance Ministry and the capital market regulator for raising the trigger limit from 15 per cent to 25 per cent, as recommended by a SEBI panel but the government is not in favour of 100 per cent open offer, sources said. “Certainly not 100 per cent,” the official said when asked if the open offer would be for the entire stake. […]
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