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The education sector is sometimes touted as the next big opportunity for investors. You only have to look at the valuations of the few plays on education in the market to realize it’s a story that has been sold to investors. And not without reason. A recession-proof sector, an inefficient public education system, a growing young population and aspiring middle class besides the “education-hungry” Indian, are reckoned to be reasons for this rush of funds into education. A CLSA Asia-Pacific report last year said India’s education and training sector is a US$40 billion market, with a potential to grow at a compounded 16% a year for the next five years. Profit margins at the operational level range from 15 to 35 % across the sector. […]
Fund raising by global private equity funds has dipped to an over five-year low of $38 billion in the third quarter of 2009, as fund managers are refraining from making any new commitments before next year. Fund raising in Q3 2009 represents a 55 per cent slump from Q2 of 2009, when the PE funds had raised an aggregate $84 billion globally, according to a report by global research firm Preqin. Private equity fund raising plummets to lowest levels since 2003, with the third quarter figures equivalent to just 45 per cent of the $84 billion raised in Q2 2009, Preqin said. […]
The Competition Commission of India (CCI) will shortly notify Section 5 and 6 of the Competition Act to regulate mergers and acquisition, according to CCI Chairman Dhanendra Kumar. CCI had already notified Section 3 (Prohibition of Anti-competitive Agreements) and Section 4 (Prevention of Abuse of Dominant Position). In his keynote address at a seminar on “Competition Laws — Development of Trade and Industry,” organised by Hyderabad-based Babul Reddy Foundation, he said competition would accelerate growth and ensure quality products and services were offered at reasonable prices to consumers. “India was transforming into a free economy. Competition is an essence of the market economy,” he said. […]
Qualified institutional placements (QIPs) have outstripped private equity (PE) funding since January by at least eight times, making it by far the most popular fund-raising route for firms this year. QIPs raised at least Rs21,209 crore since January this year, while PE funds invested only Rs2,574 crore in listed firms. Mint on 15 September reported that QIPs have raised close to more than twice of initial public offerings. A QIP is a private placement by a listed company of shares or securities convertible to equity with qualified institutional buyers approved by market regulator Securities and Exchange Board of India. Data from Delhi-based investment bank SMC Capitals Ltd shows another 48 QIPs worth Rs43,891 crore are in the pipeline. […]
In a trend that may affect private equity (PE) inflows into the country, many institutional investors of PE funds are abandoning these funds to make their own investment decisions. With global downturn affecting PE returns, these institutional investors, or limited partners, have raised doubts on the ability of fund managers, or general partners, to maximise investments and justify their high management fee, which is typically not less than 2% of the corpus. A large UK-based PE firm, which recently announced a $1.2-billion infrastructure fund to invest in power, port and road projects in India, has seen its limited partners declining to go ahead with their commitments, an industry executive said. These partners, mostly institutional investors, are taking their own decisions and co-investing with the fund in target companies, said the executive who requested not to reveal the identity of the company. […]
A majority of large private equity (PE) players are gearing up to raise fresh funds for investing in the infrastructure sector. According to a survey of the leading PE firms conducted by management consultancy Ernst & Young and industry body Asscoham, 84 per cent of the PE firms said that they found the present environment conducive to raise infrastructure-focused funds. “Investors are taking a long and hard look at their asset allocations and setting the wheels in motion for a change,” said Kuljit Singh, partner and transactions advisory leader for infrastructure, Ernst & Young. “In this process infrastructure has emerged as an asset class with long-term growth prospect providing relatively stable returns,” he added. […]
The government is preparing guidelines for the participation of private equity (PE) funds in housing sector under the Rajiv Gandhi Awaas Yojana, minister of state for urban development Saugata Roy said. The scheme aims to make a slum-free India in five years with construction of over 10 lakh houses. “The ministry, in consultation with the Planning Commission, is currently processing guidelines to ensure PE’s participation in the Yojana,” he said at a national conclave on private equity in infrastructure organized by Assocham. The government wants to harness private funds to provide affordable housing to millions of households under the scheme, he added. […]
Infrastructure, including roads, power, highways, airports, ports and railways, has emerged as an asset class with long-term growth that can provide relatively stable returns, said an Assocham-Ernst & Young survey on Private Equity in Indian Infrastructure: Strengthening the Nexus. The joint study highlights that the global economic crisis has not dampened investor confidence in the sector. Last year’s crisis had limited or short-term impact on PE investments, and activities in the sector will pick up in the next 8-12 months, it said. The survey points out that PE funds have already invested close to $2,694 million in the country’s infrastructure sector in the past three years. […]
According to a report by Sobia Khan & Pranav Nambiar of DNA, realty majors, left with few avenues to fund their ambitious hotel projects, are now hoping for a private equity (PE) bailout. Developers like Parsvnath, Nitesh Estate and Brigade Group have kicked off negotiations with PE players to bail them out. For instance, New Delhi-based Parsvnath Developers recently prepared an information memorandum for the purpose. “We plan to raise money for hospitality projects but currently it is in an early stage of discussion,” said an official on condition of anonymity. The company has expressed its intention to focus on six projects in Hyderabad, Ahmedabad, Lucknow, Goa, Mohali and Shirdi. […]
Whilst it appears that the market downturn has caused Institutional Investors (Limited Partners) to abandon investing in new private equity funds, many investors have eagerly flocked to the secondary private equity market with the intention of purchasing secondary interests at substantial discounts from the expected flood of distressed investors. This strategy has seen little success to date as the bid-to-offer spread has been too wide for many secondary transactions to complete, with the anticipated deluge of distressed sellers looking to sell interests at any price not quite materialising. […]
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