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Despite a meltdown in India’s equity markets, fresh capital continues to pour into venture and private equity funds with active plans for the country. Such firms have raised more than $1 billion (Rs4,260 crore today) in new funds in the first four months of this year alone, which is about half the total amount raised in 2007. Fund-raising, which had slowed down in the first half of 2007, is gathering momentum again. At its current rate, it may well match the record level of 2006, when private equity (PE) returned in a big way for the first time since the dotcom bust, raising $2.8 billion. After spending the last two years deploying funds, several venture capital (VC) and PE players are now raising fresh capital, to start off the next cycle of investments. “About 60-70% of the money raised is put to work in the first two-three years, so all those (who raised funds around 2006) will come back to fund-raising this year,” says Srini Vudayagiri, managing director, Lightspeed Venture Partners, which closed an $800 million global fund last fortnight. […]
According to a report by PricewaterhouseCoopers and Federation of Indian Chambers of Commerce and Industry (FICCI) the E&M industry recorded a growth of 17% over the previous year, against the projection of 15%. Equity majors like Blackstone, Temasek, Warburg Pincus, Goldman Sachs, T Rowe Price, Lehman, DE Shaw are key investors in the sector. “Given this growth, it may be the right time for such funds. Many of these funds cover a wide range of areas within the entertainment arena such as retail, shopping malls, mobile content providers lifestyle beyond the conventional media like television, film, print advertising and multiplex,'' said Jaideep Ghosh, director, KPMG Advisory Services. Asset management companies (AMCs) do have thematic funds focusing on select sectors. Mutual funds on entertainment industry are relatively new to India. Sundaram BNP Paribas Mutual and Reliance Mutual Fund have launched funds that are focused on entertainment and media industry. Religare with Vistaar Entertainment Ventures recently has launched, a film fund aimed at financing films in the country and overseas. In the first round it will have a corpus of Rs 200 crore. Pyramid Saimira is also said to be launching a similar fund in the country. […]
The skyrocketing global crude oil prices may have fuelled inflation across the world, with India being no exception. But it has also brought good news for the country by way of private equity participation. “Investors from the Middle East are taking keen interest in India’s private equity domain with a timeframe of 7-8 years to garner big returns, about which they are quite confident. According to Sharia Law, they will be investing in sectors like real estate, health care, retailing and education,” said Yen Management Consultant Managing Director and Chief Executive Officer Sunil Shirole, who met many such investors there recently. Many sovereign fund houses in Oman, Abu Dhabi, Qatar, Dubai, each with a corpus of Rs 4,000-10,000 crore, are scouting for Indian private companies to invest in. “They are trying to connect with the right kind of people to make inroads in India,” according to an industry insider, who declined to give names to safeguard his business interest. Investment Dar, an Islamic investment bank in Bahrain with a target investment of Rs 6,000 crore, has appointed Mumbai-based Yen Consultant to scout suitable investment opportunities here. […]
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: […]
An apparent slowdown in the real estate sector is forcing PE (private equity) funds to rein in their exposure to the sector, with nearly 30 per cent of the deals now stuck over valuations. PE funds and analysts have become far more cautious in evaluating real estate investments in India. One of the analysts said that some of the funds are tightening norms for valuations after the slowdown and at least 30 per cent of the deals are taking a much longer time to go through because of valuation issues. Mr Ritesh Vora, who is a director (investments) for PE fund Saffron Asset Advisers told Business Line that as the residential projects are in a correction mode, PE funds are becoming more selective. “The evaluations are more rigorous than they were a year ago. We are being more selective than before,” Mr Vohra said. But the situation was not so tough for real estate companies earlier. With the stock market on a downslide, real estate companies deferred their IPO plans and turned to PE funds to raise money. According to ICICI Securities, during the last two years, around 60 funds raised $30 billion in assets to invest in Indian real estate. […]
India’s real estate party may be cooling down rapidly. Global private equity firms say that they would rather invest in the US realty market than in the Indian one because US property prices have fallen so sharply that yields on investments there will be more attractive—without the hassle. Private equity firms made a beeline for India after the government allowed foreign direct investment in real estate in 2005. They were attracted by returns of 25-30%, but with home prices falling in the US, global private equity firms now believe it makes more sense to park their investments in that country. “Last year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” asked a senior executive at an international financial services group, who did not wish to be named. Four out of six private equity funds Mint spoke to said they are no longer investing in India. They didn’t want to be identified. The US, reeling from a subprime lending crisis, is seeing the worst housing slump since the 1930s. The median price for a single-family home has dropped 7.7% in the first quarter of the year, the biggest decline in at least 29 years, as values tumbled in two out of every three US cities, according to the National Association of Realtors. Sales of single-family houses and condominiums also fell 22% to 4.95 million at an annualized pace, the slowest in a decade. […]
The lull in initial public offerings (IPOs) presents opportunities galore for private equity funds, which seem to have become the first port of call for companies in urgent need of capital. Ironically, this very lull has also become a bane of sorts for some funds, which are already invested. Some private equity funds that had invested into companies in the past, and may have planned an exit now, have had to defer their plans as investor appetite is at its nadir. Notably, exits for a private equity investor are primarily through IPOs, rather than mergers, acquisitions or strategic sales. “There are companies in our portfolio, which may have been ripe for IPOs had the market sentiment been positive,” says K Srinivas, managing partner at BTS Investment Advisors, which has been investing in Indian small and medium enterprises since 1997. […]
The problem is emanating from the reckless lending in the USA over decades, and especially in the residential mortgage market over the past 6-7 years that has brought severe strain to the global credit markets. Real estate prices in the US had risen significantly in the last 15 years backed by some very lenient lending practices. This was all possible because such loans along with other types of debts were pooled and packaged into special vehicles (CDOs-Collateralised Debt Obligations) and sold globally to investors who were looking for higher yields against the backdrop of falling interest income from more traditional investment options such as debt issued by the US treasuries. The repercussions of the US sub-prime crisis and the slowdown are sure to show up in the rest of the developing world. India is not likely to be any different. We have already seen some amount of rationalisation of real estate prices, particularly in the residential sector. Along with high overall growth, the size of high and middle-income group population has exploded in India and their affordability levels have improved tremendously. The nationwide shortage in housing units is placed at a massive 20-25 million units. And the explosion in the IT/ITES sector will remain for a while. […]
Tight liquidity conditions may have dented private equity (PE) investments in large corporates, but closely-held family businesses in India are increasingly bringing in PE firms as strategic partners, backed by a growing trend among promoters that valuations need to be more realistic. Volume of PE deals in mid-sized family businesses has been growing sharply, according to senior executives of various PE firms. Most of the deals are in the process of being signed and are confidential. In the listed-entity sphere, PE investments could be in the $14 billion to $16 billion range, according to research firm Four-S Services. The research added that there have already been 84 PE/venture capital deals worth nearly $4.1 billion in the first two months of 2008. […]
Strong growth fundamentals of the country will help private equity investments to hit $16-billion mark this year and India is likely to remain a popular destination for the next few years, a latest report says. “PE investments might be in the range of $14-16 billion for CY08 and will remain a popular destination for 2-3 years along with China Brazil and Vietnam, Four-S Services, a provider of research, financial consulting and business content services,” said in its latest report. In the first two months of this year, as many as 84 PE or venture capital deals worth nearly $4.1 billion have been announced, the report added. Though investments in PE arena are flowing in 2008, it would be little ‘cautious', because of the downturn in the US economy, appreciating rupee, high oil prices, the firm said. (BS) […]
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