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The recent amendments to qualified institutional placement (QIP) guidelines may boost private investments in public equity (PIPE) deals. After being in the downtrend in the first half of the year, deals in listed companies will revive, say experts, making it easier for the cash-starved firms to raise capital. The Securities and Exchange Board of India (Sebi), after receiving comments from various parties, said QIPs should be based on the average price of the shares two weeks prior to the issue. The earlier pricing formula had made matters worse for investors as it required to take an average price of six months or 15 days, whichever is higher. In a bear market, where stocks fall sharply, the QIP price always exceeds the current market price and investors are not willing to pay a premium for shares, which are available at rock-bottom prices. […]
With more than one-third of market capitalization of India’s stocks eroding since January, the time would seem ideal for the private equity, or PE, business. Valuation expectations at both listed and private firms are more realistic today than ever, prompting large Indian business groups and professional PE managers to set up new funds. But a set of PE wannabes with backgrounds ranging from real estate to retail have put on hold their ambitions to enter the investment fund business. In the current market situation, raising money from investors either in India or overseas, who together contribute around two-thirds of the typical fund’s corpus, has turned difficult for these firms, experts say. The promoters of New-Delhi based Vishal Retail Ltd, which runs around 90 hypermarkets (large-size multi-product stores) and speciality stores across the country, have postponed their plans of floating a PE fund by at least a year. […]
Bangalore-based Puravankara Developers is looking for private equity investors for its affordable-housing subsidiary, Provident Housing and Infrastructure. However, it is avoiding the same for the parent company due to the high demands of private equity players. Ravi Ramu, director, Puravankara Developers said, “Today, private equity investors ask for an assured internal rate of return (IRR) of more than 20%, which is very high. Thus, we are very cautious before we bring in any private equity player into our parent company. However, we are in talks with international and national players to raise Rs 750 crore for mid-segment housing projects, which is favourable in this market situation.” […]
Global investors, including private equity majors and dedicated carbon funds, are throwing their weight behind compact fluorescent lamp (CFL) manufacturers in their bids for “green” projects on the anvil, especially Clean Development Mechanism-based CFL supply schemes. Climate Change Capital (CCC), which manages the world’s largest private sector carbon fund, has indicated its keenness to fund the CDM-based energy efficiency lighting projects being planned by the Centre as well as those coming up across States, such as Andhra Pradesh and Haryana. Among PE funds, Baring Private Equity Partners plans to channel a significant amount of its $1-billion fund in India into the energy business, especially the clean energy segment, according to industry sources. […]
Foreign venture capital investors (FVCI) waiting for an RBI approval for the past few weeks may finally get the nod to go ahead. The central bank is likely to start the process of approving pending FVCI applications. More than 50 applications from foreign venture funds are currently pending with RBI. However, venture investors eyeing the real estate sector may still have to wait. Of the 50 applications pending, at least 21 relate to realty. But the High-Level Co-ordination Committee on Financial Markets seems to be favourably inclined to other sectors. These applications have been lying with the RBI, despite Sebi vetting these as per the FVCI regulations. Sebi had raised this issue at a meeting recently. […]
Private equity(PE) firms are going beyond large corporates and super specialty hospitals to tap the Indian healthcare market. While ICICI Venture and Asian Health Alliance (AHA) are investing in a series of standalone regional hospitals, other PE firms are funding secondary hospitals in small towns. ICICI has floated I-Ven Medicare, a $250 million fund to invest in healthcare sector. The company has already invested in a series of stand-alone and niche secondary hospitals. These include $36 million in Sahyadri Hospital (Pune) and $24 million in Vikram Hospital (Mysore) besides $16.25 million in Medica Synergy (Kolkata) and $10.25 million in Delhi-based urology chain, RG Stone. […]
At a time the global economy is slowing and investors are shying away from equity markets, the Indian infrastructure sector contines to attract global equity funds. India-specific infrastructure funds worth over Rs 30,000 crore are in various stages of being raised. Important among them include a Rs 12,000-crore fund from ICICI ventures, a Rs 8,000-crore fund from Macquarie Capital Group, the SBI and International Finance Corporation (IFC), and a Rs 4,000-crore fund from Kotak Investment Advisors Ltd. In this calender year, India-focussed infrastructure funds of around Rs 10,000 crore have been raised to date. These include an over Rs 4,900-crore fund from 3i capital, Rs 2,000 crore offerings by Citigroup and Rs 800 crore raised by AXIS PE. […]
Deal making has shifted gears. The size of an individual merger and acquisition (M&A) deal as well as the number of such deals have plunged significantly this year. While volume has shrunk by 10-20% year-on-year, indicating a clear slowdown on deal street, their values have crashed by 60% for the January-July period due to lack of bulge bracket M&As. Private equity (PE) deals have also hit a low with the total value of transaction dropping to $650 million as against the two-year monthly average of $1-1.5 billion. July was the worst month for M&A this year, 43 deals worth $583.95 million were sealed compared with 51 deals worth $5.35 billion in June. […]
The erosion of value in equities since the past year has presented first-time private equity funds opportunities to invest in potential blue-chip companies. But, converting such openings into deals may be some distance away for these first timers, who are having a tough time raising funds amid worsening macro-economic conditions and waning risk-appetite of potential investors. Industry officials and watchers said limited partners (LPs), which are institutions that back private equity funds, are being very choosy about investments in first-time funds and are preferring to put money in established funds. […]
A downturn in demand for housing and the shortage of debt and investor capital in the real estate business may be bad news for realtors. But, it comes as a huge investment opportunity for private equity (PE) players. Such firms say it is a good time for them to strike deals with developers facing a cash crunch for completing their projects and fund expansion. “India is a land of scarcity and due to the downturn, more opportunistic distress investments will be made now,” says Aashish Kalra, co-founder and managing director, Trikona Capital, a real estate fund management firm. PE firms have invested around $5.8 billion in real estate cos in the first half of 2008. Real estate firms have seen a blip this year as high inflation, put at 12.1% by latest government estimates, a 13-year high, and rising interest rates as well as steep property prices have turned away buyers. […]
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