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India is likely to get over $7 billion in private equity investments in 2010, as robust economic growth is making the country an attractive market for fund mangers, according to global consultancy E & Y. “PE investments are expected to touch $6.5 billion in 2010 up from $3.5 billion in 2009,” Ernst & Young's Partner (Private Equity) Mayank Rastogi said. “This number may well cross the $7 billion-mark if some of the large ticket deals which are currently in works may get announced in the last week of December 2010,” he said. Sectors such as power and transportation, infrastructure ancillaries, consumer and branded products, health care, education and financial services, are expected to increased PE activities next year. […]
A high networth individual (HNI), invested in a real estate fund in 2005. The fund made some big investments including buying a substantial stake in a building owned by a media group in South Mumbai, but the individual has not made any returns (on investment) till date. The fund, an offshoot of a major private bank, was started in 2005 and made some major investments till 2008. The worried investor, while sharing his story with HT, said that he hopes to make some return when the fund matures in 2012-13. As scams and controversies loom over real estate, private equity (PE) investors are finding it difficult to stand by the sector in times of crisis. While most funds with an eight-year cycle have not yielded returns on investments, investors wanting to raise funds abroad are finding it tough to do so. Investors are complaining about real estate-focused funds that had promised a lot while raising money but are unable to deliver. Even new investors, mostly foreign ones, are acting cautious. […]
Property developers are knocking on the doors of portfolio managers, private equity (PE) funds, non-banking finance companies (NBFCs) and other investors as commercial banks, mostly public sector ones, are tightening lending to real estate firms in the aftermath of the bribe-for-loan scam. “The number of enquiries from developers has increased in the last couple of months and we expect a good deal flow down the line,’’ says Pradeep Khanna, senior fund manager, portfolio management services (PMS) at ICICI Prudential Asset Management Co. The firm did around half-a-dozen deals with real estate companies last year. A fund manager with a large PMS firm said the enquiries from developers had increased by 15-20 per cent since October. Portfolio managers such as ICICI Prudential, India Infoline PMS, HDFC PMS and others have invested over Rs 1,200 crore in realty projects since the third quarter of the previous financial year […]
Three big funds launched two-three years ago post positive returns. In the three years since three large private equity (PE) funds were launched to invest exclusively in Indian infrastructure, fund managers say they’re fairly satisfied with the returns. A $1.2-billion India infrastructure fund was raised by UK-based 3i in 2007. The same year, a joint venture between India’a largest bank and an Australian major started SBI Macquarie Infrastructure Fund (MSIF), which raised $1.03 billion. IDFC Project Equity raised a $927-million Indian Infrastructure Fund (IIF) in 2008. Some investments are showing signs of good returns. 3i invested $227 million (Rs 1,000 crore) in Adani Power in 2007, a year which came to known as the boom time after slowdown hit the economy next year. […]
An emerging niche within the Indian retail sector has caught the fancy of venture capitalists (VCs). And these are 'by invitation only' shopping websites. The 'by invitation only' shopping portals, a popular concept in the US, are now slowly taking roots in India. In this format, designer and premium brands in products like clothes, watches, shoes and accessories are sold at discounted rates in the range of 40-50%. Three out of just about 6-7 companies that play in the space have received private investments in the past two months. The latest deal was struck earlier this month when private shopping site for luxury brands and designer apparel Fashionandyou-. com raised $8 million from Sequoia Capital India. Last month, Helion Ventures and Accel Partners invested $2.8 million in Exclusively.in, and Germany's multimedia group Axel Springer AG acquired 19.1% stake in BagIt-Today .com. And these are only the deals which have been announced. Some say there are other VCs which have made small investments that are yet to be announced. […]
Firms double funding this year, as govt, multilateral agencies push sector. Last month, the Muthoot Pappachan Group (MPG), a leading non-banking finance company, decided to invest heavily in wind energy, to create 50 Mw generation capacity. This is part of its plan to diversify into power, automation and hospitality sectors, after a century of being in the banking business in Kerala. “A lot of PE investors are interested in renewable energy and we are exploring PE investments for our wind energy initiatives,” said Thomas John Muthoot, chairman and managing director. The renewable energy (RE) sector in India saw 135 per cent more PE and venture capital (VC) investments in 2010. Data from VCCedge show five PE/VC investments worth $377 million (Rs 1,715 crore), including a mega one of $290 mn by Blackstone in Moser Baer, the solar power company. As against this, 2009 saw six deals in the sector, worth $160 mn. […]
Private equity (PE) investors are alarmed by the Andhra Pradesh government’s move to bar micro finance institutions (MFIs) from tapping the capital market and PE investments. They have said this was regressive thinking and would stifle such lending. The AP government recommended to the Malegam committee on the subject, set up the Reserve Bank of India, that MFIs be barred from making Initial Public Offers of stock. They would then, said the government, focus on profits and defeat the purpose of microfinance. Following the news, SKS Microfinance’s share price fell by nine per cent on the Bombay Stock Exchange. It is the only listed MFI in the country. Other large MFIs like Spandana Sphoorty and Share Microfinance were looking to list on the bourses. Experts say they’d now defer their plans. AP forms a large proportion of MFI lending in the country. […]
Private equity investors may deploy nearly $1 billion in the Indian power sector in the next six months, according to Sanjay Sethi, executive director & head of infrastructure group at Kotak Mahindra Capital . “We are advising at least half a dozen power companies who are willing to raise private equity funds, and several other investment bankers too are,” Mr Sethi told ET in an interview. Global PE funds have been big investors India's infrastructure sector, especially power. “The investments could be in the range of $50-250 million in some group holding companies and subsidiaries, mainly unlisted and having strong growth prospects,” said Mr Sethi. The energy sector, which had fallen off the radar of PE investors last year, has shown a strong recovery this year. According to Venture Intelligence, a Chennai-based research company, there were 22 investments worth $2 billion in the power sector in 2010 till November, compared to 21 investments worth $560 million in 2009. […]
As scams and controversies loom over the real estate sector, private equity (PE) investors are consolidating investments and opting for tranche-based investments. While most of the equity level deals have been put in the deep freezer, deals at project levels through creating special purpose vehicle (SPV), are being evaluated. In most of the cases, the PE players are dishing out new checks and balances to secure them against any risks, say industry trackers. “With respect to return structures, PE investors are presently biased towards a structured debt model which has some form of capital protection with an assured IRR (internal rate of return) and in some cases, an additional equity kicker,” said Avinash Gupta, head, financial advisory, Deloitte (India). […]
Realtors are turning to private equity (PE) investors and non-banking financial companies (NBFCs) for money as banks tighten funding for real estate firms in the wake of the recent bribes-for-loans scam. At least three real estate companies are currently engaged in talks with PE investors to support their ongoing projects as banks turned risk-averse after transactions with realtors came under the scanner of regulators and investigating agencies, according to investment bankers. Typically, PE funds invest $50-150 million (Rs.225-675 crore) in realty firms for three-five years and make returns of around 25-30% on exit. “It (the scarcity of loans) has just started. The real shortage will be felt in the next 30-45 days. Given that banks are now hesitant to give new loans, the issue is likely to persist at least in the next two quarters. Real estate companies are now looking at private equity and non-banking firms for funds,” said Arun Kedia, director of marketing at Mumbai-based Garnet Construction Ltd. […]
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