|
|
With India’s foreign exchange reserves at over $300 billion and growing, there has been renewed interest in establishing a sovereign wealth fund (SWF), using a part of those reserves. An SWF is a separate pool of assets, primarily (but not exclusively) invested outside the country, and controlled by governments to achieve economic, financial, and strategic objectives. While there are well-established conservative international norms for investing forex reserves, this is not the case with the SWFs, which can engage in more aggressive risk-management practices. India is a significant recipient of investments by SWFs from abroad. […]
Private equity funds sense their time has come in the Indian property arena, with developers offering plum deals as banks tighten lending and a stock market slump shuts off public share offerings. Since India eased rules on inward investment in the construction industry in early 2005, foreign investors have earmarked an estimated $20 billion for the booming property market. But government figures show only about $2 billion has actually been spent in the last three years. Funds used to complain that Indian developers slapped inflated price tags on themselves, their land, and projects. But a fall in company valuations, and prospects of a drop in overheated land prices, has cheered private equity investors while making life tougher for developers. […]
Data from Grant Thornton reveal that of the $19.03 billion worth of private equity deals done in India in 2007, $6.76 billion or 35.5% was accounted for by the real estate infrastructure sector. On Monday, Deutsche Bank, announcing the India launch of RREEF Alternative Investments (RAI), its global asset management platform for investing in real estate, infrastructure and private equity funds, also said it is committed to investing $1 billion in Indian real estate and infrastructure sectors over the next three years. Meanwhile, local player Axis Private Equity announced the first closure of its Axis Infrastructure Fund at Rs 600 crore ($150 million), saying that the eventual target will be Rs 2,000-2,400 crore ($500-600 million). Then there was Blackstone, which manages real estate assets worth $132 billion globally, which announced its first real estate deal in India. […]
The Asian Development Bank is taking large risks by investing more in private equity firms than it is allowed to and internal controls of such investments show “serious weaknesses”, the Financial Times reported on Monday. Citing a confidential report by the ADB's evaluation unit, the FT said the bank “breached its capital allocation limit for private equity funds of 5 percent”, adding that it needed new risk management standards. A spokeswoman for the Manila-headquartered lender said the report was still being finalised and the ADB could not comment until after management had seen it. “It's a work in progress. (When) We get the final report we will study the findings and be in a position to comment,” said Ann Quon, ADB's director of external relations. The multilateral organisation's lending policies have been thrust under the spotlight recently amid criticism from the United States, one of its biggest donors, about its focus on large loans to middle-income countries such as China and India rather than smaller loans to poorer nations. […]
The next set of merger and acquisitions are expected in the Indian port sector despite the recent rise in cost of purchasing terminals, according to a study. “Ports are increasingly attracting the interest of investors. The merger and acquisitions trend in port have hit India, too,” Ernst and Young said in a study. One of the main reasons why there would be an increase in M&A activities in this sector is that investors feel that port offers a steady source of income, it found. Financial investors, especially with a long-term horizon, like port assets because these assets tend to generate steady cash flows and high margins. […]
The health sciences sector has historically been one of the favoured sectors for PE firms in India and globally. In the former years, there were early stage investments in firms like Ajanta Pharma, Medicorp, Gland Pharma, Neuland, Biocon etc. Majority of these were led by Indian Venture Capital (VC) firms and were done in the late nineties. As the sector grew dramatically and Indian firms achieved perceivable success in the global generics arena, the size of deals and stage of investment changed. While there have been large deals such as Matrix, Emcure, Jubilant, Apollo, they have been comparatively fewer and majority of the deals average on/at $15-20 million range. As per industry estimates, PE statistics of 2007 show that the health sciences sector accounted for only two percent of the total PE market in India. Funds which have been active in the health sciences sector are ICICI Ventures, CVC, Chrys Capital, IFC, Actis and Schroders. While formulations and Active Pharmaceutical Ingredients (API) were the key areas of interest earlier, outsourcing Contract Research and Manufacturing Services, (CRAMS) and healthcare has been the dominant investment themes in recent times. Outsourcing/CRAMS continues to be a favourite with three major investments this year (Sai Advantium, GVK Biosciences, Siro) focusing on this theme. Two large deals (Max/IFC and Apollo/Apax Partners) this year in healthcare reiterated the importance of healthcare in the portfolio of large, global funds. […]
Buyouts by private equity investors this year account for 15 per cent of the total M&A deals in the country. This has increased four per cent from the same period last year. The most significant PE deal in the country has been the 324 million dollar buyout of 14 per cent stake in Akruti City by Citi Venture Capital International and American International Group this year. PE investments constitute eight per cent of the total global M&A volumes, while they account for six per cent of the deals in the US so far this year. The average size of the PE deals in 2008 so far has been 49 million dollars, against 27 million dollars last year. […]
The unending euphoria over real estate, which India has been witnessing over the past few years, is finally starting to show signs of ebbing, and that is probably healthy news for the long-term growth of this sector. Collapse of a few recent PE deals, postponement of capital-raising plans by developers and poor response to government land auctions are indicators of the “expected slowdown” in Indian real estate chapter. Recalling the success story of a few years ago when home loan rates sank to 7.5%, it resulted in huge demand for quality real estate and paved the way for the spiking in property rates in many cities. Since then this industry displayed an unstoppable upward curve. However, today, with interest rates already very high with negligible scope of reduction due to inflationary pressures, the real estate momentum would not be the same. Signs of a slowdown have started becoming visible in the residential sector. There has already been a marginal decline in rental and capital values of apartments across a few micro markets and the trend will only gain momentum as we move ahead, especially in peripheral and suburban locations where significant supply is in the pipeline. Even the office market has not escaped. It has witnessed stagnancy in rentals in majority of locations in Q1 2008. […]
Private Equity investments (PE) in India have grown to about twice the value to $4 billion in the first quarter ended March 31 of the calendar year 2008, when compared to the corresponding period last year, maintaining its position as the hot destination in Asia (excluding Japan) surpassing China, which has recorded just $570 million in investments so far. According to a statement from IndusView Advisors, a corporate advisory firm, India had first achieved the milestone of surpassing China in attracting PE investments towards the end of the second quarter of the calendar year 2007 when it had grossed $10 billion compared with China’s $8 billion. China received $13 billion in private equity investments in 2006 compared with $7 billion in India during the same period. The equation has changed since then, with India well in the lead now. […]
While the VC/PE business has matured a lot in recent years, it is still instructive to see the dramatic transformation which has occurred in terms of where investments are going. Completely different sectors are soaking in money in 2008, compared to even 2-3 years ago. The industry started off in the late 90s, when the first foreign firms started looking at India. The new entrants focused at IT and internet, much in line with the craze in US at that time. Quite a few of the early deals didn’t work out. The business really picked up only when investors broadened their horizons started looking at non-tech sectors like infrastructure, capital goods, financial services, retail, and so on. In the last three months, for example, infrasructure and real estate accounted for 30% of PE investments. Energy, telecom, media/entertainment, financial services, and manufacturing followed. Between them, these six sectors mentioned here accounted for 90% of all PE investments over the last three months. […]
|
Post your messages.Please refrain from posting offensive messages. IndiaPE accepts no liability for the consequences of your reliance on these postings and messages.
|