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Contrary to popular perception, the past five months — for all the turbulence in the stock market and subsequent valuation crisis — have been the best times for private equity in India. The private equity sphere between January and May witnessed as many as 151 deals aggregating to $5.5 billion (or Rs 23,100 crore) as compared to 140 deals totalling $4 billion (or Rs 16,400) during the same period last year, according to PE research firm Venture Intelligence. Among sectors, infrastructure topped the ‘in-demand’ chart with 26 deals aggregating to $2,504 million (or Rs 10,517 crore) being reported during the period under consideration. The rise in number of deals is attributed to availability of assets at lesser prices, lowering valuation expectations of promoters and rising costs of borrowing. […]
At the India’s Investors Forum, delegates will be treated to presentations by well-known and established high-profile speakers from the industry. Delegates will come away with an in depth knowledge of India’s investment industry which would allow them to anticipate challenges, capitalize on regulatory reform, adopt best business practices, and identify new and emerging opportunities in the industry. Additionally, delegates will have the opportunity to network, learn, and share with their peers in the industry. This exclusive 2 day conference must not be missed by delegates who wish to upgrade their knowledge of the industry and to gain an edge over their competitors. Special rebates for INDIA PE subscribers & Hedge Funds India’s readers/patrons to attend the mentioned event when registering with Ms. Kelly Lee. For more information on how to register & exhibit, and special rebates please contact Ms. Kelly Lee Tel No: + 6032723 6798 Email: KellyL@marcusevanskl.com Event link: […]
Private equity firms could drive brokerage consolidation — it’s probably a connection that is hard to decipher for most people. By all indications, it does seem as if the consolidation among brokerages has been driven by private equity firms. Here’s how the story has been unfolding. Over the last two years, there have been a slew of private equity players making significant investments in broking firms. Among the prominent deals are those of Citi Venture Capital acquiring a 85% stake in Sharekhan in a Rs 650-crore deal, it also picked up 19.9% in Anand Rathi for Rs 100 crore and Barings PE arm Duckworth picked up a 45% stake in JRG Securities for Rs 150 crore. Apart from this, ICICI Ventures and Barings Private equity bought into Karvy Stock Broking with a 20% stake for Rs 440 crore and IFC picked up a 12.5% holding in Angel Broking for Rs 150 crore. […]
Foreign investors may shun the Indian real estate market as lower asset prices in the US and the potential to earn better returns skew the risk-reward equation against emerging markets such as India, say private equity experts. “Real estate developers face a double whammy of slowdown in the overall growth and hardening of interest rates, while the perceived risk-reward equation for India is going down,” said S Sriniwasan, CEO, Kotak Real Estate Fund. Take a pension fund in the US, which has the option to invest in the real estate in India or other markets. As the level of information is better in other markets, investors find it easier to take a call there. “These are existing assets, so there's no development risk unlike in India. Also, if they are investing at home, there's no currency or political risk compared to here. As they can make a return 18-20 per cent in the US, they are wondering if it is worth going to India for an additional 5 per cent,” said a real estate expert. Investors feel that the marginal higher return is not commensurate with the higher risk investors have to take here. These are early days yet, but this is reflected in the slowdown in decision-making for investment in India, pointed out experts. […]
A study on private equity investment in public equity (PIPE) of infrastructure companies in India undertaken by SMC Investment Solutions & Services found that the recent slump in the equity market wiped off Rs 2,428 crore of private equity capital. Though the domestic infrastructure sector is regarded as the engine of the country's economic growth, experts say higher valuations at the time of investing and readjustment of the Indian financial markets to global economic environment has impacted the calculations of private equity players. For example, as many as 10 private equity investors, including Eton Fund LP, CITI Group, T Rowe Price and Deutsche Bank, had invested Rs 3,841 crore in in GMR Infrastructure at the rate of Rs 240 per equity share in 2007. The share price of GMR has plunged by 56 per cent to Rs 105.55. As a result, the market value of private equity investment in the company has halved to Rs 1,690 crore. Similarly, Carlyle Group, which invested Rs 158.4 crore in Great Offshore Ltd for Rs 860 per equity share, has witnessed the market value of its holding fall by 30.26 per cent. The stock of Great Offshore last closed at Rs 599.75. […]
With venture capital (VC) and private equity (PE) investments in India growing, investment banks are emerging as an important link matching companies seeking funds and firms vying for investment opportunities. Experts say up to 40% of investment opportunities are helped by such intermediaries. “Investment banks are crucial as you need a third party during negotiations,” says K.P. Balaraj, managing director, Sequoia Capital India Advisors Pvt. Ltd. Investment banks with large operations such as local arms of the US financial houses such as Merrill Lynch and Co. Inc. or the likes of home-grown Motilal Oswal Securities Ltd typically look for large deals—say, above $20 million (Rs86 crore) each. Professional services firms such as Ernst and Young and KPMG International, too, have large corporate finance teams. And, Yes Bank Ltd, IDBI Bank Ltd and ICICI Bank Ltd are among a growing breed of lenders with their own investment arms. But, it is the boutique investment banks and specialists such as Spark Capital or Veda Corporate Advisors Pvt. Ltd that are gaining custom from start-ups and firms with small investment needs. Others active in the PE and VC business include Avendus Capital, Edelweiss Capital Ltd, Cipher Capital Advisors Pvt. Ltd, Mape Advisory Group and o3 Capital Advisors Pvt. Ltd. An investment bank’s job begins with screening companies, which are then introduced to VC and PE players. […]
After a long lull, the Reserve Bank of India (RBI) has allowed a string of foreign venture capital (VC) funds to invest in the country. While this decision could be driven partly by fears of a slowdown and drying capital inflows, the shift in mood may also have a lot to do with these funds changing their charter of investments and making upfront commitments to convince RBI. In the last two months, the central bank has cleared applications from as many as six foreign VC funds. Though many funds are still waiting in the wings, the industry perceives it as a positive development. Advisors to some of the funds say that among other reasons, this could have been achieved only after they changed their charters to insert a specific clause that there will be no investment in the real estate sector. Till now, the funds were only giving an undertaking, which is just a letter to RBI, stating that they will stay away from real estate – a simple declaration which the regulator thought was inadequate. There are other changes that foreign VCs are making to push their case. Significantly, they are refraining from making any mention of sectors which have certain sensitivity in terms of foreign direct investment. For instance, as funds spell out the segments they would be interested to invest in, there is no reference to industries like retail, non-banking finance companies and banking. […]
Downturn in the world economies notwithstanding, India is witnessing increasing number of private equity (PE)deals with the total value touching $6.39 billion so far this year. PE deals in the country have fared well since the beginning of this year despite global credit crunch, high oil prices, inflation among others. “The total number of PE deals during the first five months of 2008 stands at 170, with an announced value of $6.39 billion as against 159 deals amounting to $4.97 billion during the corresponding period in 2007,” global consulting major Grant Thornton said. Meanwhile, another global deal tracking firm Zephyr said India is among the top 10 countries in terms of value of private equity deals across the world. […]
Three months after the global stock market crash, companies are back to striking merger and acquisition (M&A) deals, but private equity (PE) firms have clearly retreated into a shell. The data for May shows that while M&A volumes have pretty much clawed back to the monthly average for 2007, PE deals shrank to a 3-year low in May after hitting an all-time high of 60 transactions in January this year. There were a total of 48 M&As, with an average ticket size of $51 million, which were strategic in nature involving Indian firms either as an acquirer or the target as per the latest dealtracker by advisory firm Grant Thornton. This included 25 cross border deals, of which 17 were outbound worth $1.58 billion and 8 were inbound deals adding up to $630 million, besides 23 domestic deals with an announced value of $240 million. While there was no frenetic activity for strategic M&As, the month of May recorded the second-highest deal volume during the past five months, marginally below the 56 deals announced in January. The total number of M&A deals during the first five months of 2008 stands at 214 with an announced value of $13.19 billion. […]
Investors may be worried that big buyout firms are changing their investing style, but it’s not stopping them from turning over more money to the asset class. With credit markets at a standstill and the pace of private equity deal-making having slowed dramatically, almost three-quarters of institutional investors worry that private equity firms will stray into less familiar strategies or geographies in the quest to find a home for all of the capital raised in recent years, according to Coller Capital’s just-released Global Private Equity Barometer, a semi-annual survey of institutional investors. The survey included 103 institutional investors from North America, Europe and Asia. They have good reason to worry about this so-called “style drift”; many of the biggest private-equity firms are already getting creative with their investment strategies. Some are taking minority stakes in public companies, such as TPG Capital’s recent investments in Washington Mutual and UK-based lender Bradford & Bingley. Others are pumping money abroad, particularly into emerging markets such as China, India or even Africa. […]
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