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Funds raise Rs 20,000 cr in last 3 years to invest in the sector. Infrastructure projects seem to have emerged as a hot favourite of private equity (PE) players this year. So far in 2010, there have been 19 deals in the infrastructure sector, involving an investment of close to Rs 5,000 crore, according to Venture Intelligence data. In the same period last year, there were 14 deals with a cumulative value of around Rs 1,200 crore. The heightened interest pans across the sector. From such known players as GMR Energy, which received a $200-million (around Rs 900-crore) investment from the Singapore government-owned Temasek Holdings, to little-known Azure Power, anyone with a good business model and potential to grow seems to be in line to received capital. And to meet the rising infrastructure demand for maintaining the India growth story, global investors like 3i and JP Morgan and domestic players like the PE fund promoted by State Bank of India are ready with resources to be deployed. According to industry estimates, funds have raised over Rs 20,000 crore during the last three years for investment in the sector. […]
As private equity (PE) investors wait for the K-12 education space to become more deregulated, two firms that service the sector are looking to raise money from them. Among the different models being considered as a means of skirting around the restrictions are school content providers, school management contracts and international baccalaureate (IB) schools. iDiscoveri, which partners schools to improve learning methods and trains teachers, has appointed BMR Advisors Pvt. Ltd as an investment adviser, two persons familiar with the development said on condition of anonymity. IDFC Private Equity Co. Ltd could put in money in the firm, they said, without specifying the quantum of investment. IDFC declined to comment on the matter. […]
The domestic banking industry does not appear to be a major investment hotspot for private equity (PE) players. The absence of clarity on mergers and acquisition (M&A) norms seems to have prompted PE players to adopt a wait-and-watch policy. PE firms, which infused Rs 2,250 crore into the banking system in 2007, have developed cold feet in providing funds to the sector, even as the economy showed signs of recovery and PE funding have once again taken off. The figure had doubled in a span of one year. However, in 2010, no banks have received any PE funding. According to Venture Intelligence data, Centurion Bank of Punjab, Yes Bank, UTI Bank, South Indian Bank and ICICI Bank had received PE funding […]
Education has emerged one of the most lucrative sectors in India, making private equity investors line up in big numbers to the $80-billion plus industry. Numbers crunched by education-focused private equity fund Kaizen Management Advisors show that venture capitalists and private equity players have pumped in excess of $140 million so far this year, 50% more than what they invested in the whole of 2009. “We feel the education sector offers tremendous growth potential and is poised for rapid growth in the next few years,” says Ramesh Venkat, chief executive of Reliance Equity Advisors, a private equity arm of Reliance Capital, which entered the segment a few months ago by investing about Rs 100 crore in Pathways World School, a primary and higher secondary school. The total VC/PE investment into the sector is expected to be close to $300 million this year, says Sandeep Aneja, managing director of Kaizen Management Advisors. Dhanraj Bhagat, partner at research firm Grant Thornton, says investments into education will grow 40-50 % every year. […]
The rise in the stock market in the past year may have brought cheer to most investors, but not to private equity (PE) funds. The equity rebound has had promoters demanding valuations 20-30% higher than the estimates of PE investors. The mismatch is resulting in at least one-third of the deals under negotiations falling through, say PE firms. This is on top of the usual 30-40% drop in deals in the initial stages because of hurdles over business plans, management teams or performance. “That (stock market rise) tends to impact deal closings as certain promoters, who may have been happy at the valuations discussed pre-surge, try to renegotiate valuations upward when markets surge,” said Jacob Kurian, partner at PE fund New Silk Route Advisors Pvt. Ltd. K. Srinivasan, managing partner at BTS Investment Advisors Pvt. Ltd, said the stock market surge “is definitely not helping us in deal closing. Valuations are shooting through the roof”. […]
About 77% of private equity players in the country expect an increase in investment momentum in the coming 12 months, according to a survey by Deloitte Touche Tohmatsu India. And the deals will be simpler. The report said 87% of respondents rated 'structured development capital' (in essence, a return to the traditional way of structuring development capital deals, using less leverage and a simplification of the structure) to be the key focus area for investment this fiscal. Following this are transactions in the venture capital, pre-IPO and buyout space, in that order of priority. “Some funds have committed a lot of private investments in public enterprise (PIPE) deals since 2007 and have suffered mark-to-market losses. We'll increasingly see a return to basics — back to structured development capital deals. However, PIPEs will continue to see activity given the lack of sizable development capital deals,” Avinash Gupta, head-financial advisory services for Deloitte Touche Tohmatsu India, said in the report. […]
Private equity (PE) funds will remain a preferred choice for capital growth and Indian industries will receive about $ 10 billion investments from the PE deals by the end of this year, says a latest report jointly released by global auditing firm KPMG and the Confederation of India Industries (CII). “India has a very vibrant private equity industry with over $ 32.5 billion invested across more than 1,500 PE deals from January, 2006, till date. As per the industry estimates, PE investments would be in the range of $ 9-10 billion in the year ending December 31, 2010,” says the report. It adds PE funding is expected to provide capital to fund much-needed infrastructure projects to support gross domestic product (GDP) growth of seven to eight per cent in India. According to the report, the country needs about $ 1.3 trillion investment over the next three years to sustain a GDP growth of seven to nine per cent out of which $ 60-100 billion will be PE investments. […]
Private Equity (PE) and Venture Capital (VC) funding in India needs to increase three-fold to 430 billion annually from the current level to shore up funding for small but promising companies, said a KPMG-CII report. Besides, it said, as the Indian economy expands, the country's investment needs are estimated to be over $1.25 trillion over the next three years. Higher PE/VC funding can contribute to the requirement by funding the growth of small but promising companies that are not able to tap equity and debt markets at the outset. It said that even in the case of listed companies, 40 per cent have market capitalisation of less than Rs 1.25 billion (Rs 125 crore), with Sensex at 17,000, and 80 per cent of the Bombay Stock Exchange (BSE) listed companies have revenues of less than Rs 100 crore. Thus, making a pitch for greater PE/VC paricipation in the country, the report said, “It is estimated that investments from PE and VC needs to be increased three fold, from a trailing level of $10 billion annually, to $30 billion.” […]
Venture capital (VC) fund Sequoia Capital’s exit from Kerala-based non-banking financial company Manappuram General Finance and Leasing Ltd two weeks ago is just the beginning of an avalanche of high-return exits lined up for this year. Nearly half a dozen VC and private equity (PE) firms Mint spoke with are preparing for at least a dozen portfolio exits as they reach the end of their investment horizons, and to cash in on an improving economy. Overall, experts see at least 50 exits over the next six-nine months. India has never seen more than 20 VC exits in a year. But in the first three months of 2010 alone, there have been 10 VC exits against three last year, according to research firm Venture Intelligence. The flood of profitable exits, experts say, would help further establish India as an investment destination for VCs and PE funds. […]
A study says India emerged as one of private equity investors' favourite investment destinations in April, with the volume of transactions rising three-fold to $840 million in comparison to the same month last year. According to the monthly report of VCCEdge, the financial platform of VCCircle.com, private equity deals in India amounted to $840 million in April, 2010, against $285 million in the corresponding period of the previous year. An upturn was also witnessed in terms of the number of deals recorded during the said period. In April this year, 35 PE transactions were reported, against 22 deals registered in the same period in 2009, the report added. However, the total value of PE deals reported in April was less than the quantum of investment made by these firms in March. The report said, “On a month-on-month basis, deals value in April, 2010, was lower than that in March, 2010. The deal activity began with slow momentum in February, 2010… accelerated in March, 2010. However, this pace could not be maintained and deal activity recorded a dip at $840 million in April, 2010. […]
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