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In October 2007, Bangalore-based developer Nitesh Estates tied up with Citigroup Property Investors, the real estate private equity (PE) arm of Citigroup Inc., to set up shopping malls worth around $300 million (about Rs1,180 crore then) in Thiruvananthapuram, Chennai, Kochi and Bangalore over the next three-four years. Now, Nitesh Estates is looking for another partner or investor for the shopping mall venture, a senior company official said on Monday on condition of anonymity, because the decision to tie up with another entity hasn’t yet been made. Citi received a bailout on Sunday under which the US government agreed to protect the largest US bank from hundreds of billions of dollars in toxic assets and infused $20 billion of fresh capital. […]
However, it is not only the real estate and auto sectors that are witnessing a slowdown; the entire industry is facing a liquidity crisis. In ’08, PE deals slowed down for the first time in July in terms of numbers as well as value. The total number of deals in the first seven months of ’08 stood at 215, against 224 in the first seven months of ’07. Though PE deals have slowed down, certain PE funds still feel there is value in several companies. The recent Rs 12,960-crore PE stake sale in Tata Teleservices to Japanese firm NTT DoCoMo proves that certain promising business models still exist even today and one can make the best of it. […]
Though private equity (PE) players in India are in a wait-and-watch mode, a few of them are ready to explore the opportunities from which they can reap amid turmoil. Reliance Equity Advisors Ltd (REAL), the PE arm of Anil Dhirubhai Ambani Group (ADAG), is betting big on the secondary deals in the PE space in India. Through these deals, which are not common in India, a PE player can buy the investment or stake, which was earlier primarily done by another PE firm. Previous, in the buoyant market, exits through initial public offer (IPO) route were common. As the situation worsens, companies are keeping aside their IPO plans, which made the exits for PE players difficult. In 2007, about 95 IPOs were floated, out of which 16 PE players made exits. However, this year, out of a total of 36 IPOs, only about nine PE made exits […]
The economic slump may have slowed down the overall private equity investments scenario, but relatively more PE deals are being struck in the emerging businesses space. In the third quarter, including mergers & acquisitions, private equity and venture capital deals were on a decline. However, over 40% of the total deals happened in the emerging companies (SMEs and midcaps). The percentage of the same was only 25% in the last quarter. Interestingly, of the total 12 PE deals in October, six (50%) can be categorised as emerging companies. According to figures obtained from Grant Thornton, the announced value of all the 12 deals stood at $372 million. […]
Start-up health care and drug technology firms are struggling to attract funding as venture capital and private equity firms shy away from high-risk projects with long gestation periods in the wake of the global economic downturn. The early exits in June of Citigroup Venture Capital International and ICICI Venture Funds Management Co. Ltd from Perlecan Pharma Pvt. Ltd, the drug discovery and development company of Dr Reddy’s Laboratories Ltd, due to risk apprehensions were just the beginning, industry experts say. In October, Piramal Life Sciences Ltd, the newly constituted drug research firm of Piramal Healthcare Ltd, had to put on hold its plan to raise funds from private equity firms as it could not attract investments at the valuation it had anticipated. […]
Private equity (PE) investments in India have declined by 72 per cent to $9.67 billion till October, largely due to global financial turmoil. The total number of PE deals during the first 10 months of 2008 stands at 274, with an announced value of $9.67 billion as against 328 deals amounting to $13.43 billion during the corresponding period in 2007, global consulting major Grant Thornton said. “Private equity investments in India are showing some amount of slowdown, considering that a considerable amount of investments have been coming from international funds, which are in turn funded by international banks or investment banks,” Specialist Advisory Services Partner CG Srividya said. […]
The Foreign Investment Promotion Board (FIPB) has ruled that foreign investment can flow into private equity funds registered as trusts. The move opens up another window of funds for private equity players and venture capital funds registered as trusts. The department of industrial policy & promotion (Dipp) was opposed to FDI in trusts, but FIPB has overruled the argument. This can lead to a new channel of investment for India Inc, especially start-ups. The FIPB’s view is that FDI can be permitted in trusts which intend to carry out PE investments, provided they register themselves as VC funds. Following the FIPB ruling, Dipp is now planning to introduce guidelines for allowing FDI in trusts that invest in companies, especially start-ups, with the aim of long term capital gains. Apart from mandatory registration with capital market regulator Sebi, the foreign investor will also have to comply with the know-your-customer (KYC) guidelines, a Dipp source said. […]
A double whammy of adverse market conditions and a depreciating rupee is expected to hasten the consolidation process within the private equity (PE) and venture capital (VC) space, say industry watchers. Many foreign players are likely to exit their investments altogether in the country, they point out. Alok Aggarwal, chairman and founder of Evalueserve, a firm that tracks PE and VC firms, expects nearly 20% of foreign PE and VC firms to pull out. “Out of 370 PE and VC firms active in India, about 260 are foreign players. With the financial market meltdown and rupee depreciation having dealt major blows to the PE industry, we expect 60 to 70 of them to exit the country within next 12 months,” he told ET. […]
Venture capital funds and private equity players continue to scout for investments in the Indian infrastructure sector but await Government initiatives to speed up investments, according to venture capital industry players. While there is continued interest from US and European investments funds in wide-ranging areas within infrastructure including airports, ports, roads and power projects, they want the Government, which is the main investor, to make first move. However, they warn that the overall investment during 2008 will come down compared to last year. While the exit options have come down due to market situation, the size of the deals and number of transactions will be lesser as investors are in a consolidation and wait and watch mode, according to Mr Sudhir Sethi, Founder and Chairman and Managing Director of IDG Ventures India. […]
PE firms are aggressively topping up earlier investments made in listed companies at a time when valuations are at a fraction of what they were a year ago. Among the big firms scooping up equity in listed entities to average out costs are ChrysCapital and Singapore-based Orient Global which have made direct secondary market investments. Also See Value Adds “There are some very attractive valuations. The corrections have taken place and depending on our investment thesis, we have an opportunity to take a position in listed companies, and top it up, too,” said Sanjiv Kaul, managing director of ChrysCapital, while declining to provide further details. Others such as Standard Chartered Private Equity Ltd and Blackstone Group Lp. have also been buying, the only difference being that these have had some promoter-level engagements at an earlier stage. […]
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