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In another month that saw more than $1 billion (around R4,500 crore) in private equity/venture capital (PE/VC) investments, May accounted for $1.14 billion of investments in Indian companies across 39 deals; around 180% increase over $408 million across 17 deals in the same period last year. The average deal size increased from $29.1 miliion to $33.6 million. 2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion in the first five months last year. The infrastructure (including power) sector topped the investment chart, accounting for 59%, with 12 deals worth $676.4 million. […]
Necessity, they say, is the mother of invention. In the high adrenaline world of private equity (PE), it’s also a matter of sustenance. So at a time when raising money for new PE schemes from global high new worth individuals (HNIs), family offices, endowment and educational trusts or pension schemes — or any such limited partners (LPs) in industryspeak — is becoming exceedingly tough, GPs from these fund houses are coming out with innovative ideas to woo global investors. Forget about lock-ins, assured IRRs or ROEs or any other high finance jargon. In this mad scramble (see chart: On the road) of getting a cheque signed from the fat cats, some GPs are even willing to give personal guarantees against investments, offer a liquid pool of cash — in many cases from their own pocket — for “any time” redemptions and are willing to negotiate and split the traditional 2 per cent management fee. Lawyers, global placement agency chiefs, and the fund managers will not take specific names but recently two real estate PE funds, based out of Mumbai and Delhi, raised about Rs 300 crore each after negotiating with LPs and by keeping a liquid cash pool. […]
Merger and acquisition (M&A ) and Private equity (PE) activities in the transport and logistics sector in the country during the first five months of 2011 have seen a significant increase as compared to that for the same months last year. Last month alone witnessed five deals, including Warburg Pincus putting $100million in Continental Warehousing Corporation , Fidelity Growth Partners investing $13.5 million in Transpole Logistics and Aqua Logistics taking over Nikkos Logistics. Given the hectic activities, sources familiar with the development are expecting to see at least one deal every month on transport infrastructure and logistics sectors of the country . On the PE side, scores of India-focused funds managing over $20 billion are now eager to deploy capital given the recent slowdown. On the M&A side, the country presents itself as an ideal ground where industry consolidation has only just begun . […]
Private equity investors are poised to exit roughly $5 billion worth of Indian real estate investments in the next two or three years, a Nomura report said, adding pressure to a sector struggling with access to capital and falling property prices. During the boom years of 2006-2008, India attracted an influx of private equity in property, a big chunk of it structured as debt, and in some cases developers will be forced to buy back the investment from the PE firms, the report said. “This will increase pressure on developers to generate cash flows through affordable pricing and better execution,” Nomura analyst Aatash Shah wrote. […]
Foreign direct investments (FDI) last fiscal fell 28% to a four-year low, data showed on Thursday, raising concerns over stability of capital flows. This is also the first time in five years that FDI is lower than portfolio flows. A slowdown in FDI means the economy is not getting enough long-term foreign funds to invest in projects and add physical assets, such as plants and machinery. Provisional data released by the Reserve Bank of India (RBI) pegged total FDI at $27.024 billion as of end March. This included fresh equity in green-field projects, reinvested earnings as well as change in ownership of existing equity by new investors. Investments in new projects stood at $20.09 billion, the lowest that the country has received in the last four years. […]
Private equity (PE) funds are quick to seize attractive investment opportunities, and few deals in recent years have captured their imagination-and capital-more than infrastructure projects in India. Over the past five years, PE funds have invested approximately $13 billion-around one-fourth of their total capital flows to the country-into infrastructure. Annual PE investment in the sector has grown fourfold, from about $1 billion in 2006 to $4 billion in 2010. Infrastructure activity looks set to accelerate. Optimism about investment in the sector was a major highlight in a survey of PE industry insiders, which Bain conducted with the Indian Private Equity and Venture Capital Association. Nearly all respondents forecast continued double-digit growth over the next six to 12 months, with around half saying they expected venture capital and PE deal-making in the sector to grow by 25-50%. […]
Private equity firms are sitting on at least $20 billion of uninvested capital or dry capital that can be deployed in India as deal activity picks up and the economic recovery gains pace across the country. “The capital overhang will lead to immense competition in the market wherein chase for high quality deals will intensify,” said Sri Rajan, managing director and head of the private equity practice in India at Bain & Company , a global management consulting firm that released the India PE Report 2011 on Tuesday. “Private equity firms who are sitting on dry capital will invest it in other parts of Asia in case if they don't do it in India,” said Rajan adding that the problem of capital overhang exists even in mature markets such as the US. The amount of dry capital currently available in the industry is enough to fund all 2010 deal activity twice over. […]
Starved by banks who are going slow on loans to realtors and slowing sales of apartments, smaller real estate developers in western India are wooing private equity investors to raise as much as Rs 1,000 crore to invest in their new projects. Real estate developers such as Maharashtra-based Everest Developers, Puranik Builders, Sunjana Realtors and Omkar Realtors are planning to raise around Rs 300 crore each through private equity funds. “In March-April period, residential sales were down and cash flow of many developers has come down. Banks are also very cautious to lend to real estate players. Private equity players are showing interest since they will be able to get better deals,” Ravi Ahuja, director at Cushman and Wakefield, said. […]
India Inc has favoured the country setting up a sovereign wealth fund to service the needs of fast growing economy, especially the infrastructure sector, says a survey. A majority of the respondents surveyed pegged the size of sovereign wealth fund (SWF) at USD 50 billion, the survey by industry body Assocham said, adding that the fund structure should be based on a public-private-partnership model. […]
In a move that will enable foreign governments to make more investments in Indian stocks , capital market regulator Sebi has allowed them to buy to a maximum of 20 per cent stake in any listed company without any additional obligations. The proposed threshold of 20 per cent is twice the current limit of 10 per cent, beyond which sovereign wealth funds, or investment arms of foreign governments need to make an open offer for buying any additional stake. Sebi, which will grant any such approval on case-by-case basis, has also sought changes in the relevant central government regulations about foreign investments, said a senior official. A proposal to this effect was approved at a Sebi board meeting on March 25 and the new guidelines would be announced soon, he added. […]
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