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When Chennai-based Everonn Education begins setting up international schools in the country next year, it plans to do so as a private limited entity under Section 25 of the Companies Act, 1956, and not as a trust. The reason: The company sees this as an alternative way of having a scalable model (which the trust structure does not allow as its bars payment of dividends). Increasingly, educational institutions in the country are taking innovative routes to expand. For example, schools that cannot go for the Section 25 option have begun turning to “smart equity” from private equity (PE) players to expand access to new technologies, build new set of services and add resources. This explains the $22-million (100 crore) deal that Reliance Equity Advisors — Reliance Capital’s PE arm — struck with Pathway World School recently. The stake acquired was, however, not disclosed. […]
Dealmaking is back in the private equity and venture capital circles with the economic recovery taking hold. After a pretty subdued 2008 and 2009, PE deals have breached $500 million mark every month since February, according to VCCEdge, the financial research platform of VCCircle. The gestation period for deals which doubled to 6-9 months, rising even up to a year in fiscal 2009, has also come down and deals in various stages of due diligence are finally seeing closures. Bharat Banka, MD & CEO, Aditya Birla Capital Advisors, said, “With the exception of any unanticipated shocks in the economy such as extremely weak monsoon or external shocks such as oil prices, the investment interest is expected to remain robust.” […]
As private equity (PE) and venture capital (VC) deal-making gathers pace, PE firms are trying to raise cash, both in India and overseas, to purchase stakes in companies hungry for capital after last year’s downturn in the alternative investment market. Alternative investors such as PE and VC firms also stand to derive tax benefits by using the so-called dual structure, in which they raise separate domestic and offshore funds for investment in Indian firms. The alternative is a unified structure, which requires offshore funds to register in India as a foreign venture capital investor (FVCI) or through the Foreign Investment Promotion Board (FIPB) and put money in a domestic trust that makes the final investment. […]
Shying away from risking their capital in small and medium enterprises (SMEs) in the wake of the economic slowdown, Private equity (PE) investment in the SME sector dipped to USD 580 million in 2009, down about 68 percent year-on-year. PE investment in the SME sector last calendar year stood at USD 580 million via 81 deals against USD 1,812 million through 187 deals in 2008, a study by industry body ASSOCHAM said. “Poor returns on investments in the midst of challenging times have forced fund managers to think twice when it comes to putting too much into the (SME) sector,” it added. […]
In spite of eroding confidence of private equity (PE) firms during the global downturn, a clutch of big global names, who till now were not confident about India, have taken the plunge into Indian markets. These big PE players, such as Quadrangle Capital, Appollo Management, TA Associates, Summit Partners and Bain Capital, have done a deal for the first time in India, marking their entry into one of the fastest growing emerging markets. While some of them had set up shops in the country in 2008-09, they were unable to do deals because global markets went into a tailspin. Already, some of the global PE majors such as Blackstone, Carlyle, General Atlantic, Apax and 3i are present in India, but the entry of new PE funds into the Indian market shows their growing appetite for Indian companies. Investment bankers say most of these PE firms are actively scouting for deals and are no more dormant. […]
According to a joint Paper brought out by Deloitte and ASSOCHAM, more than 80% private equity investment is likely in healthcare, education and clean energy in future as these 3 sectors are emerging as most favoured ones for PEs investors in India. Dr Swati Piramal president of ASSOCHAM pointed out that the Government of India has been laying substantial focus to build these sectors through public-private partnership projects across the country with a view to providing quality services in these three key areas of economic activities. PEs investment in these sectors suits their investors the most as the aforesaid areas assured return on investments for a period exceeding 5 years, pointed out joint findings of Deloitte and ASSOCHAM Paper. […]
Domestic real estate-specific private equity funds have started raising money after a hiatus as developers are finding it difficult to tap the capital markets through initial public offerings. Indiareit, a real estate private equity fund promoted by Ajay Piramal group, is raising Rs 700 crore in the domestic market. The fund is looking at projects in major cities such as Mumbai, Bangalore and Pune and the investments would be made in other developers’ projects and not in the company’s real estate firm. Ramesh Jogani, managing director and CEO, Indiareit, said, “The fund will be subscribed by June and its duration is 7 years.” Jogani plans to invest 30% from this new fund in projects this year itself, with 20% in the initial-stage projects and 10% in the later-stage projects. The fund is targeting an internal rate of return of 25%. […]
Private equity (PE) and venture capital (VC) deals in India may be hit once a Central Board of Direct Taxes (CBDT) formula to determine the fair market value of shares for calculating tax comes into effect after the finance Bill is passed in Parliament. Finance minister Pranab Mukherjee in his February Budget had proposed that a firm which buys shares at a price lower than the fair market value of such shares will have to pay tax on the difference between the two. He did not define fair value. The board issued a notification on 8 April saying the fair market value of unlisted shares will be calculated based on a formula that uses the net asset value methodology, based on the difference between assets and liabilities appearing on the balance sheet. […]
The total M&A and PE (incl. QIP) deals in the month of March 2010 were valued at US$13.83bn (86 Deals) as compared to US$2.57bn (33 deals) and US$4.83bn (67 Deals) in the corresponding month of 2009 and 2008 respectively. The total value of outbound deals (Indian companies acquiring businesses outside India) in March 2010 was US$12.30bn (17deals) as compared to US$0.05bn (4 deals) and US$2.67bn (15 deals) during the corresponding month in 2009 and 2008 respectively. The total value of inbound deals (foreign companies or their subsidiaries acquiring Indian businesses) in March 2010 was US$415mn (9 deals) as compared to US$278mn (6 deals) and US$811mn (5 deals) during the corresponding month in 2009 and 2008 respectively. […]
Several Indian managers of global private equity (PE) funds have quit their jobs in the past few months to strike out on their own or move to smaller funds—a trend that industry executives say stems partly from the rarity of big-ticket deals coveted by overseas investors. Last month, Warburg Pincus India Pvt. Ltd managing director Rajesh Khanna stepped down to start his own PE fund. Khanna declined to comment about his plan for this story. In December, Harsha Raghavan, who was with the PE arm of Goldman Sachs in India and later moved to the local unit of UK-based buyout firm Candover Investments Plc., teamed up with Neeraj Bhargava to start Steer Capital after Candover shut its India operation. In August, Subbu Subramaniam, a partner with Barings Private Equity Partners India Ltd, left to start his own fund. “Foreign funds bring only two things—access to funds and investment discipline. After investing in India, frustration creeps in (among local managers) when the fund does not understand the Indian market as well as you do,” […]
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