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With an estimated US$40bn market for private institutions and a CAGR of 8.6%, it is no surprise that PE & VC investors are looking to ramp up the 30 investments (worth over US$300mn) they have already made in Education-related companies, the Venture Intelligence report indicates. Over 80% of Private Equity and Venture Capital investors surveyed by Venture Intelligence in its newly released “Private Equity Pulse – Education” report, plan to make an investment in Education companies during the next 6-8 months. […]
Reflecting the current economic slowdown, venture capital (VC) firms invested just $49.2 million (around Rs245 crore) in 14 companies in the three months to 31 March, contracting nearly 58% from the $116 million invested a year ago, calculations made from Thomson Reuters data show. All new companies took a hit when it came to deals. However, early-stage companies accounted for a majority of deals in the January-March period. At the beginning of the year, VC firms had predicted a slowing of deals, citing the welfare of existing portfolio companies as their biggest concern for 2009. […]
Private equity is under assault. The current reckoning that is unfolding is a dramatic contrast to the overconfidence that prevailed in large swaths of the private equity market as recently as a year ago. For over 20 years the best private equity managers delivered on this promise. They consistently outperformed public indexes by wide margins. This performance was accomplished by operating on the fringes of the financial system, as is logical for an asset class exploiting inefficiencies. In research published recently, Boston Consulting Group estimates that at least 50% of the private equity deals done in the recent past will default on their debt. Second, investors who were yearning for yield are over-allocated to private equity and reeling from the massive declines in the value of all asset classes. Finally, the liquidity crunch has changed the availability of cheap debt to the asset class for a long time. […]
PE investments in India declined for the 1st time in six years in CY’08, as entrepreneurs were not willing to settle for lower valuation despite the steep price correction in markets. PE firms invested $10.59 bn over 312 deals in India in CY’08, down 44.35%, from $19.03 bn invested across 405 deals in CY’07. There were only 28 deals of over $100 MM in CY’08 while in CY’07 there were as many as 53 such deals. Decline in PE transactions was mainly because there was less activity in H2CY’08 on account of global financial crisis; the value of PE deals declined to $3.5 bn compared with $7.1 bn in H1CY’08. ARC Financial Services have recently done an analysis on private equity activity in India. To get more details on the report please contact www.arc-fs.com . […]
Global economic downturn has given rise to a new trend in the private equity scene, secondaries, wherein partners in a PE fund are preferring to liquidate their position to another party to meet redemption pressures. “Going forward we will see more secondary deals in the Indian private equity space. Now more such deals are coming to the fore as increased number of partners are looking at liquidating their position to meet prior commitments,” Venture Intelligence CEO Arun Natarajan said. Known as 'Secondary deals' in Private Equity parlance, 'secondaries' refer to a Limited Partner (LP) or the part owner of the fund selling its stake in the fund to another partner or a third party to seek an exit option. […]
Weak market sentiment continues to spook private equity funds. Private Equity players invested dramatically lower sums in India in the last three months, as risk aversion continued despite a steep decline in valuation. Private Equity deals have dropped a staggering 87% year on year and 56% sequentially, according to data from Venture Intelligence, a research service focussed on private equity and M & A transaction in the country. Not only has the deal pipeline slowed down, but the size of deals has also reduced. PE firms invested about $526 million across 36 deals during the quarter ended March 09, when compared to $3.9 billion across 133 deals during the same period last year. Sequentially, the previous quarter saw $1.2 billion struck across 63 deals. […]
Private equity (PE) investments in India declined by over 50 per cent, between April 2008 and February 2009, to $6.6 billion (around Rs 33,000 crore) from $14.3 billion (Rs 70,000 crore) a year ago. Total number of deals also dropped 33 per cent, to 292 from 436. According to industry experts, investment activity would pick up slowly through the year although they do not expect 2009 to be much better than 2008. Arun Natarajan, founder and chief executive officer, Venture Intelligence, a Chennai-based PE research firm which compiled the data, said that, except for media and entertainment which reported a 96 per cent growth in value terms, all industries have reported a drop in investments. Some of the big-ticket investments during the period include a $428-million investment by Providence in Adiya Birla Telecom in May 2008, followed by $225 million by GIC in Reid & Taylor India in June 2008, $190 million by a PE consortium led by IDFC in Quippo Telecom Infrastructure in August 2008, $175 million by Goldman Sachs in Mahindra & Mahindra in May and $174 million by Masdar in WinWind in September 2008. […]
Private-equity investors are being offered stakes in Indian companies as hedge funds and banks seek to offload assets, said an executive at 3i Group Plc. Hedge funds and banks that bought minority stakes in Indian firms in recent years are finding it hard to unwind their investments because the “listed market is dead,” said Anil Ahuja, who heads the Asian business of the London-based private- equity firm. 3i has poured more than $2 billion into Asia since 2006, and last month invested $161 million in Krishnapatnam Port Company Ltd., its third infrastructure investment in the nation. “There’s a whole new slew of transactions that are starting to be discussed where people who need the capital are offloading stakes which they hold in unlisted companies,” he said, declining to name the companies. […]
Collapse of discount retailer Subhiksha coupled with economic downturn and fear-psychosis created by the Satyam scam is leading private equity investors to rethink their investment strategies in India, mainly in those firms with significant promoter control, experts say. “The Subhiksha incident will make PE firms more cautious on how much of a free hand they allow to a promoter. Some PE funds are concerned that promoters have a wide range of authority in their companies and could look to establish structures that would limit some of this authority,” KPMG Head of Private Equity Advisory Group Vikram Utamsingh told media. Meanwhile, SMC Capitals equity head Jagannadham Thunuguntla said success and failure are a part of the PE business. […]
The amount of private equity investments flowing into once-magnetic India could halve this year as funds face edgy investors, souring portfolios, slowing growth and vendors still reluctant to cut their prices. TPG managing director Puneet Bhatia says a good part of the PE investments in India over the last two years, as an extended bull run dramatically ended, were fundamentally flawed. “The sustainable private equity deal volumes in this market would be just about 50 percent of the last couple of years,” Bhatia said at a PE conference in Mumbai. India drew private equity investment of $10.7 billion in 2008, according to AVCJ Research, when the stock market fell by more than half. The stock market is down 7 percent in 2009. […]
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