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IT, manufacturing, banking and engineering undoubtedly are still the favourites as far as private equity investors are concerned. However, over the past nine months “shallow sectors” like agriculture, energy, hospitality, telecom and media are gaining importance among bulge-bracket investors. “A standing testimony to this aspect is the fact that even a slow-moving sector like agriculture has pocketed $29 million by way of three separate deals. Agro products and agriculture-based research companies are attracting investors,” said Arun Natarajan, managing director, Venture Intelligence, a Chennai-based PE research firm. Among other investments, in the energy sector, PE parties have invested close to $252 million across 11 deals over the past nine months. The $68 million joint equity placement of Citigroup and UTI Ventures in Ind Bharat Infrastructure, IFC’s $30 million investment in Gujarat State Petronet and the $24 million joint investment of NYLIM India and WIH Holdings are some of the major PE deals in the energy sector during the considered period. According to a sectoral outlook report put out by the International Energy Agency, China and India will account for around 45% of the increase in global primary energy demand through 2030. […]
Private equity (PE) investment in India has overtaken China this year to emerge as the biggest Asian destination (excluding Japan) for PE funds. Investments have crossed $10 billion between January-October as against $8.3 billion recorded in China in the same period, says a report from investment advisory firm IndusView. China received $13 billion worth of PE investments in 2006 compared to $7 billion in India during the same period. The equation has, however, changed since then with India leading the Asian charts this year. Real estate and infrastructure emerged as the top sectors attracting PE investment in India this year accounting for half of the total PE money flowing into India through 52 deals. Out of this, real estate received $2.6 billion through 32 deals. Real estate as a sector was closely followed by telecom with $ 2.1 billion worth of PE investments. […]
The Indian private equity (PE) industry’s fondness for private investment in public equity (PIPE) deals remains unaffected by soaring share prices. If anything, it has only grown stronger. Till September this year, PE firms announced 16 such deals worth an estimated $1.71 billion (Rs6,720 crore), against $1.25 billion across 36 deals for all of 2006. Overall, PIPE deals accounted for 21.5% of the estimated $7.92 billion worth of PE transactions announced between January and September. This, however, does not include deals announced by non-PE investors such as hedge funds and other financial institutions and the actual share of PIPEs could be much higher. Unconfirmed estimates put PIPEs at 40-60% of all deals announced this year. “The proportion of such investments in India is significantly higher compared to international levels,” says Biswajit Subramanian, managing director, Providence Equity Partners Llc. The firm opened shop in New Delhi in January and says it is agreeable to PIPEs under the right circumstances. There are some, however, who regard PIPEs as a strategy that goes against the basic objectives of PE investing. “The question is, as a PE investor, what kind of (shareholder) rights do you get when you take a minority interest in a public company?” asks Anil Ahuja, managing director and co-head, Asia, at 3i Group Plc. […]
Private Equity (PE) investments in India have grown to $10 billion so far this year from $2 billion in 2005, and has emerged as the top destination in Asia (excluding Japan) surpassing China that recorded $8.3 billion in investments so far. According to a statement from IndusView Advisors, a cross-border advisory firm, the Indian real estate and infrastructure sectors have been the key contributor to this increasing trend as it emerged favourite with 50% share in value of all PE investments with an inflow of about $5 billion in 52 deals this year. Real estate has emerged as the favourite segment with 26% share in value of all PE investments having received $2.6 billion in 32 deals, and was closely followed by telecommunications with 21% share in value of all investments at $2.1 billion. “India's private equity market can expand four-fold using deal value as a percent of gross domestic product, and maintain the top slot ahead of China, its nearest competing economy. The infrastructure sector will provide the necessary edge.” said Bundeep Singh Rangar, chairman, IndusView. […]
After IT and telecom sectors, special economic zones (SEZ) have caught the fancy of private equity (PE) companies, with most firms looking at acquiring a minimum 10 per cent stake in SEZs. Global PE firms such as Goldman Sachs, Deutsche Bank, Blackstone Group, Lehman Brothers and others have already initiated talks with domestic real estate companies that are setting up these zones. Not to be left behind, Indian PE companies such as Kshitij Real Estate Funds (a Pantaloon Group company) and HDFC Realty are also scouting for opportunities in this sector. Even though no deals have been signed so far, the industry expects some to come through in the next two to three months. “Real estate developers setting up SEZs are getting a lot of queries from investment companies. This sector being a booming one, companies are looking at making an investment that could yield returns at a later point in time,” said Ashutosh Pathare, vice-president (commercial sales and business development) of the real estate company, Shapoorji Pallonji. […]
Several private equity (PE) groups are creating funds exclusively for investing in clean technology in India, adding momentum to a sector where no funds currently exist. These groups include the Nevada-based Arvco Capital Research Llc., Washington, DC-based Global Environment Fund, Hyderabad-based New Ventures India, New Delhi-based Sun Group and Mumbai-based Yes Bank Ltd. These are in addition to the increasing number of PE funds chasing the same segment from their general funds. The capital pool is estimated at $500 million (Rs1,970 crore), not including the general funds, which is almost equal to the sum of all disclosed investments in Indian clean technology from 2001 until now. The funds could close in the next nine months to three years and would be deployed over the next one to seven years. Interest in India is strong as many perceive the country as having the right talent fordeveloping technology and the additional incentive to do so be-cause of its growing power needs—and shortages. […]
India is a key market in Asia for private equity (PE) funds looking to invest in distressed companies, according to New York-based private equity firm Clearwater Capital Partners, Llc. The six-year old firm focuses on small- and medium-sized distressed companies in Asia (excluding Japan) using both debt and equity. Clearwater has a total corpus of $1.7 billion (about Rs6,681 crore, pension fund California Public Employees’ Retirement System is a key investor), and this includes its latest $900 million fund that closed in June. In India, Clearwater said it has $450 million invested or committed across 26 companies, mostly in the last two-and-a-half-years. This includes investments in automotive-parts company Jamna Auto Industries Ltd, wire products manufacturer Diamond Cables Ltd, hospitality company Kamath Hotels (India) Ltd, and offshore services company Dolphin Offshore Enterprises (India) Ltd. The investments reflects the fund’s sector focus which includes manufacturing, hospitality, auto parts, power, and oil and gas. India and Korea are our two largest allocations of capital today. […]
A predominance of family-owned companies and a booming Indian stock market are posing challenges for private equity firms, who are finding new ways to invest in the fast-growing economy, top private equity managers said. Private equity investment in India is expected to grow by a third to $10 billion this year, but most deals involve publicly traded firms because families are reluctant to cede management control, they said. “Culturally, there's been resistance to give up management control, as entrepreneurs just pass on their business to their children,” Manisha Girotra, managing director, UBS Securities India, said at a Fortune Global Forum conference. “So PE (private equity) firms are taking minority positions instead of doing buyouts, and do late-stage investments.” Most top global private equity firms have set up offices in India and have stepped up the pace of deal-making recently. Blackstone Group has said it has a huge pipeline of deals and was targeting deals in the $50-$500 million range, even as U.S. and European credit markets remained frozen because of a global credit crunch. […]
Fund raising by global private equity (PE) firms in the July-September quarter hit a two-year low on a quarterly basis in the wake of the recent crisis in the US subprime mortgage market. While a delay in their fund-raising plans may result in a temporary drop in the number of private equity deals globally, it could come as a blessing in disguise for Indian and Chinese companies planning to raise capital. Around 136 private equity funds have raised $91 billion globally during the quarter under review against $177 billion in the April-June quarter, according to Private Equity Intelligence, a global private equity research entity. “This suggests that in the short term the credit crunch (due to the subprime crisis) has had an adverse effect on fund raising,” the Private Equity Intelligence report said. But shortage of money supply is the only concern for private equity firms, especially the smaller ones, in meeting their fund raising targets. “With so many managers on the road trying to gather commitments for their funds, it is likely that managers will find it increasingly challenging to reach their original fund-raising targets. Apart from the biggest firms, and those that are able to draw entirely from existing limited partners, it is going to become an increasingly difficult time for fund managers currently on the road,” it said. Currently, there are 1,195 funds seeking a staggering $619 billion in aggregate target commitments, estimates Private Equity Intelligence. […]
Sudhir Sethi, managing director of IDG Ventures India, has seen 551 potential investee companies since September last year. His $150 million fund has invested in 3 and hopes to complete 4 more investments by the end of this year. But, feels Sethi, as much as individual entrepreneurship is thriving, existing companies with a few out-of-the-box ideas are also not averse to spinning out new entities from the parent company, unleashing tremendous value in the process. The beneficiaries: venture capitalists (VC) like Sethi, who are inevitably invited to share in the growth, and at a later date, the spoils from these spin-offs. In June this year, Sasken Communication Technologies spun out ConnectM, with Sasken and Sethi’s IDG Ventures jointly investing $6 million in the venture. The new company offers machine-to-machine solutions in the transportation, industrials, utilities and enterprise markets. […]
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