|
|
After the Bharti Infratel deal, India could see more group approach in PE investing. Private equity firms in India are going `clubbing’. Earlier this month, eight private equities, led by Temasek Holdings, an investment arm of the Singapore government, decided to band together to invest around Rs 4,800 crore in Bharti Infratel, the tower arm of the Bharti Group. While a group approach in investment is not unusual in the private equity space (Temasek itself had invested in Matrix with Newbridge), the latest deal, which valued Bharti Infratel at Rs 40,000-50,000 crore, stands out for two reasons: first, an eight-way deal is a rarity all over the world; and second, it was the largest `club deal’ by private equities in India. While Temasek put in Rs 2,000 crore, US private equity firm Kohlberg Kravis Roberts & Co put in Rs 1,000 crore and the other six put together committed the balance Rs 1,600 crore. The six firms are the Investment Corporation of Dubai (ICD), Goldman Sachs, Macquarie, AIF Capital, Citigroup and India Equity Partners (IEP). […]
The venture capital sector is jittery as Budget 2008 draws near. VCs, especially the domestic ones, were in a state of lethargy since Budget 2007, when ‘pass through’ status was granted only to investments in specific IT and biotech areas. And the plan to bring overseas M&As involving Indian companies under the tax net, that too with retrospective effect from June 1976, is making them even more worried. “Taxing M&As will be a very retrograde step. The world now sees us as a developed economy and we should behave in that manner. It will be totally unfair to tax M&As, that too in retrospect,” says president of TiE Delhi Saurabh Srivsatava. “The government should also restore the pass through status as it was earlier, as it does not make any material difference to tax authorities. But, for the industry, it’s making a complete mess,” he adds. Another thing worrying the VCs is the government’s move to ‘plug loopholes’ in the Mauritius DTAA (Double Taxation Avoidance Act) because all their acquisitions/investments in India are routed through Mauritius. Many major VCs, like Canaan, Helion, Clearstone and Sequioa, invest in India through routes like Mauritius. According to estimates, VCs invested about $900 million through this route till last year. Other tax havens with which India has a treaty are Cayman Islands, Singapore and more recently Luxembourg. […]
Foreign private equity funds are queuing up for biting into the city's burgeoning real estate pie. Over the past 18 months, several large PE transactions have been concluded, in addition to an enterprise level hospitality exposure by Credit Suisse in Park Hotels. The inflow of organized private equity began with New Vernon taking exposure in an IT building project developed by Sureka Group in association with Bikram Dasgupta's Globsyn. UK REIT then invested a significant amount in residential projects being developed by the Eden group. The largest private equity exposure in terms of project size came from Starwood Capital and Walton Street into a 150 acre mixed use project being developed by the Sriram group in Hindustan Motors near Uttarpara. Both have pumped $50 million each into the development. “The PE funds have been scouting the turf for the last three years. We are very happy to witness that they are now concluding transactions and deploying money into projects,” said Abhijit Das, regional director, Jones Lang LaSalle Meghraj, the largest real estate consultancy firm in the country. […]
ICICI Venture’s cancellation of plans to invest $800 million (Rs 3,200 crore) in Jaypee Infratech and Kishore Biyani’s Indivision India Partners’ reluctance to go ahead with its $62.5 million (Rs 250 crore) investment in Dish TV are just two instances of a rather horrid picture for private equity deal flow in India. Industry sources say that there are a number of such deals where brakes have been slammed in the last minute due to the recent stock market meltdown. As a result, there’s a widening gap between what a private equity firm is willing to pay and what the promoters of the company are willing to accept. Blackstone and the private equity arm of Goldman Sachs are two firms that are said to have pulled deals, but DNA Money could not ascertain this. “I know of 8-10 other deals worth about $300 million that have fallen through,” said Gaurav Mathur, managing director, India Equity Partners, a $350 million India-dedicated fund that has made six investments so far. He was not comfortable disclosing names. […]
Private equity placements are finding favour with India Inc with the number of such transactions surpassing that of merger and acquisition deals in the first month of this year. Indian companies announced as many as 60 private equity deals as against 56 M&A transactions, according to the data compiled by global consultancy firm Grant Thornton. However, the total value of PE deals was lower at 2.05 billion dollars compared to $3.01 billion in M&As transactions. During calendar year 2007, the total number of M&A deals announced stood at around 661, while there were as many as 386 private equity deals during the same period. The major M&A deals in January this year were Tata Chemicals Limited's acquisition of US-based General Chemical Industrial Products Inc, and Great Offshore's acquisition of SeaDragon Offshore. […]
With the secondary market witnessing a 25 per cent correction in January, private equity players are expecting valuations to become more realistic in the late-stage investments in India Inc, at least during this calendar year. The performance of secondary markets always acts as a benchmark for PE players to pump capital investment into a private company, or even a publicly listed company. Despite the unprecedented rally in the markets in the past few years, the share of PE investments in listed companies has shown a decrease since 2004. The PE investments in public enterprises (PIPEs) amounted to $4.2 billion across 80 deals, against a total PE investment of $17 billion, last year. […]
On Saturday, Goa State Industries Association (GSIA) and private equity (PE) firm Lauris Capital Partners (HK) Ltd held the first of a two-part event to educate small and medium enterprises (SMEs) on PE and help them access investors. The event, Introduction to Private Equity and Private Equity Investment Process, preceded India Private Equity Fair, where 25 companies looking for investments ranging from $10 million to $200 million (Rs40 crore to Rs800 crore) will be on showcase to PE firms at Mumbai on Wednesday. These events are significant, because typically it is venture capital investors who hold showcases and workshops for start-ups. It seems that PE investors are working harder to access SME deals. And they are realizing that SMEs need a similar level of hand-holding through the investment process as start-ups, because they don’t have exposure to PE investors, nor the budget to educate themselves via investment bankers or consultants. This may be the start of a trend to help bridge the gap between SMEs (particularly in smaller Indian cities) and investors. On Saturday, 55 people listened as Hong Kong-based Harshawardhan Sabale, founder and head of Lauris Capital Partners, which does SME buyouts in India, demystified how funds are set up, how fund managers get paid and how they make investments. […]
With IT projects taking a backseat on the investment front, private equity (PE) funds are cosying up to residential, commercial and hospitality spaces in south India. Pragnya, a Mauritius-based private equity fund focussed on the real estate market in India, has so far invested about $40 million in realty projects, including an integrated township project by L&T in south India, and expects its investments to reach $100-110 million this year. It is also planning to come out with a $150-million Pragnya Fund 2, which will invest in realty and hospitality projects, particularly in the South. In December 2007, Red Fort Capital, a global real estate private equity fund, announced a Rs 400-crore investment plan for Chennai's realty market over the next six months. It has acquired 10 acres of land for a large residential project in Chennai. The company has already invested Rs 1,200 crore on projects in Bangalore and Hyderabad. […]
Is the public primary market turmoil affecting the PE sector yet? From the trend in February, it does appear to be so. With a week still left to go, fund raising from private markets has been fairly good. About $1.6 billion has been raised so far. If you annualise this, this is a run rate of over $20 billion, which is better than 2007. There’s not much impact in the number of deals either. Around 24 deals have been announced, which is nearly a deal a day. There were nearly 400 deals in 2007, a little over a deal a day. So, the current run rate is not too bad. What is discernible, maybe, is some impact on investments in listed equity by private investment in private equity (PIPE) deals. It appears only one PIPE deal has been announced so far. According to PE investors, while stock prices have come down, promoters are not yet willing to reconcile to them. PE investors will naturally not pay the price which was prevailing two months ago at this time. Take the case of a building material company, which was quoting around Rs 230 till two months ago. It wanted to do a PIPE deal at Rs 270 while the PE investors were not willing to go beyond Rs 250. The deal didn’t happen. Now, the company quotes well below Rs 200. Clearly, promoters may prefer to wait at this point. If the stock does not cross Rs 200 for, say, the next 3-4 months, then they may be forced to go for a lower price. […]
January was an unusual month. Despite the market crash and battered valuations thereafter, deal makers had a hectic schedule. January recorded the maximum number of mergers & acquisitions (M&A) and private equity (PE) deals — the highest-ever in a single month in India. Strategic investors and PE funds were striking a deal every six hours, totalling 116 deals worth $5 billion. The previous high was in January 2007 when there were 101 deals announced in a single month. In January 2008, according to the latest dealtracker from advisory firm Grant Thornton, there were 56 M&A deals worth $3.01 billion and 60 PE deals worth $2.05 billion. In volume terms, this was the biggest month for PE funds in India. For PE deals too, the previous best was in January last year when 56 deals were announced. This had come down later during the year with an annual average of 33 PE deals per month during 2007. Grant Thornton corporate advisory services partner CG Srividya says: “A lot of the deals announced in January would have actually been closed by December itself. Moreover, if we look at the stock market correction, it has not led to total collapse of all sectors, some have been affected less than others. Many PE funds were waiting for a correction to enter the market and the fall would lead at least some promoters to have realistic expectations. In fact, there could be a positive spin-off for PE deals because of the correction.” […]
|
Post your messages.Please refrain from posting offensive messages. IndiaPE accepts no liability for the consequences of your reliance on these postings and messages.
|