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Foreign funds and institutions have, till date, raised approximately $30 billion to be invested in Indian real estate with an estimate of $3 billion that has been committed, according to real estate services firm Cushman & Wakefield. The industry is progressing up the learning curve, and the spectrum of private equity transactions range from project-specific special purpose vehicles (SPVs) to entity-level investments. According to Cushman & Wakefield’s latest report ‘India Gaining Momentum-Indian real estate investment dynamics’, investments in the market have spread rather evenly over three broad investment vehicles. While a majority of the investment still remained either at the portfolio and SPV-level partnership, at 40 per cent and 36 per cent respectively, the number of entity-level partnerships formed 26 per cent of the total investment in the sector. […]
Mid-sized mergers and acquisitions were expected to flourish across emerging Asia with China the market leader, followed by India, a report by a consulting and auditing firm said Thursday. Asia's mid-market deals currently make up more than 20 per cent of the world's total, according to the Deloitte report. The volume of mid-sized deals, defined as $50 million to $250 million, has grown tenfold in the past four years, it added. While interest-rate worries and lending concerns could stem the surge in large-scale mergers and acquisitions (M&A), the mid-market deals have demonstrated strong resilience, Deloitte said. “We expect the M&A market in the Asia-Pacific to continue to grow due to strong fundamentals and robust growth in this region,” The Business Times quoted chief executive officer Chaly Mah as saying. “Many investors are buying into a piece of the action in fast-growing economies like China, India and Vietnam.” China accounts for more than 40 per cent of all mid-market deals in Asia. The country's foreign exchange surplus represents massive potential spending power for outbound cross-border deals, the report said. […]
Private equity firms from the U.S. have been sniffing around India seriously for over a decade now. But in the past year, the private equity investor has been working overtime. In the country's five-star hotels, top restaurants, and airport VIP lounges, dealmakers in dark suits are omnipresent, carrying stacks of papers and looking for investments in everything from banking and financial services to real estate, health care. technology, and media. What's bringing them to India is a combination of the country's rising consumerism, impressive growth in gross domestic product, and a hot stock market. Now private equity deals are hitting record levels: $10.8 billion in the eight months of 2007, way above the $7.8 billion invested in all of 2006, according to Grant Thornton International, one of India's oldest accounting firms. Money is pouring into companies on the growth curve, those that are about to gain access to the capital markets, and even listed companies looking to expand. […]
Internet companies are back in favour with the venture capital community. Four Interactive — the company which runs asklaila.com — has raised $10 million in venture capital from Lightspeed Venture Partners and the Silicon Valley Bank (SVB). A few months ago, the company had raised its first round of funding from Matrix Partners. The company is yet to start making revenues and marketing itself. Founded by two former Microsoft executives, the firm was started in November 2006 to fill the gap for city-based information on shops, restaurants, pubs and other facilities through more relevant search results and contextual information about these facilities, in addition to an online yellow pages kind of directory listing. The site has already gone live with information on Bangalore, and has gone in for additional funding to finance its expansion into other cities. “In the US, around 7-8% of advertising is online. In India, it is not even 1%,” said Shriram Adukoorie, one of the founders. Mr Adukoorie, who set up MSN in India and was its country manager from 1999-2003, quit to start the firm with Kiran Konduri, a colleague in Microsoft and Wipro. […]
Optimistic of country’s real estate sector, leading private equity (PE) players feel $10-20 billion would pour into the sector in the next three years. As much as 27% of the 50 PE firms responded to a recently-released Ernst & Young (E&Y) survey, however, expect $20 billion would be deployed into the sector, while 68% believe that it would hover around $5-10 billion in the same period. The remaining five per cent believe that total investment would be less than $5 billion. All 50 PE players rate the Indian real estate sector as an ‘attractive’ destination and 79% of them feel that India is a ‘very good’ or an ‘excellent’ investment destination compared to other Asian countries, justifying the current euphoria about Indian real estate amongst global investors. An established and preferred mode of investment for foreign investors to enter into the Indian real estate market, PE funds played an aggressive role in the last fiscal and the same trend is likely to continue to dominate the real estate transaction activity in 2007-08. […]
First came the foreign institutional investors and changed the landscape of the Indian equity market and also investing styles. Now that they have settled down, we have a new breed of investors, the private equity funds, who are creating ripples in the global market, have started to make their presence felt in India too. Recent deals like the Blackstone Group buying out the majority stake in textile company Gokaldas Exports and also taking a stake in Nagarjuna Construction Company and General Atlantic, Warburg Pincus and the Blackstone Group eyeing a larger share in Infomedia India, have started to garner attention. As an investor, it becomes paramount to understand the dynamics of the funds and be armed with the information. With global experience, PE funds can, to a great extent, determine the future of the company that they have invested in. After all, PE investing is not merely portfolio investing as in the case of FIIs. PE funds go beyond and influence management decisions and in many cases are the management themselves. […]
The widening demand-supply gap in power generation is turning out to be a ‘blessing in disguise’ for India’s leading captive power and diesel generator manufacturers. While Goldman Sachs is set to buy around 10% stake in Delhi-based Sudhir Gensets for $100 million, Standard Chartered Private Equity (SCPE) is buying 11% stake in Mumbai-based Powerica, another leading equipment maker, for around $50 million. Investment banking sources said the power sector, particularly captive power companies, is attracting private equity (PE) investors. “Even if the government initiates any action today, it would take at least five years for the demand-supply gap to narrow. Till then, captive power is the only solution,” says a senior country manager at a UK-based PE firm. For Goldman Sachs, investments into India’s infrastructure, especially the power sector, will remain key, said sources. The global investment banking firm has already invested around $800 million across various sectors in the country since early 2006. […]
Real estate remains a favourite with investors and $5-10 billion worth of investment is expected in the sector in the next three years, even as investors remain wary of lack of transparency and land ownership issues, says an Ernst & Young survey. According to the survey, respondents rated real estate as one of the most attractive investment opportunities. Most investors said they prefer making investments in specific projects and not in the entity. The sector is expected to generate returns of 25-30 % over the next 2-3 years but returns are expected to plateau after that, the survey said. About 68% of the respondents said the sector would receive investments in the range of $5-10 billion over the next three years while 27% said they expect investment of over $10 billion. Most investors prefer to take the special purpose vehicle (SPV) route for picking up stakes in real estate companies. About 95% of investors surveyed prefer to take the SPV route for investment, with 69% favouring SPV with single asset/project holding and 26% favouring SPV with multiple asset holding. “Investors are still shying away from enterprise level investment,” said the survey. […]
Upcoming listings may see returns of some funds rising three-fold. Private equity (PE) funds are looking at a more than three-fold increase in returns in some upcoming initial public offers (IPOs). In the case of the recently concluded IPOs of Koutons Retail and Consolidated Construction Consortium, the funds are looking at returns of nearly three times the issue price — the returns would be much bigger after listing. The issues were subscribed 45 times and 81.18 times, respectively. Some funds are also set to hit the jackpot from the upcoming floats of Jyothi Laboratories (Actis and CLSA) and Edelweiss Capital (Greater Pacific). Both the companies have filed their draft documents with the Securities and Exchange Board of India. Private equity funds UTI Ventures ($12 million), Argonaut Private Equity ($10 million) and Passport India Investment ($5 million) had invested $27 million in Koutons Retail, buying the shares at Rs 140 apiece couple of years back. Now, at the IPO price band of Rs 370-415 alone, the PEs have got handsome returns. […]
The net value of mergers and acquisitions (M&A) involving Indian companies announced till date in 2007 has crossed the $50 billion (Rs1.99 trillion), for the first time in a year, according to deal-data tracker Grant Thornton India. The value of deals announced in the first 15 days of September, has already taken the year’s total deal value well over $50 billion, said Dhanraj Bhagat, a partner who heads the firm’s investment banking practice in Mumbai. Grant Thorton India is a member firm of Grant Thornton International. The firm will publish the M&A deal report for September, only around mid-October. “The value of announced deals in September could be around $4 billion,” said Bhagat. The value of 460 inbound and outbound M&A deals involving Indian companies announced until the end of August stood at $48.5 billion. On the other hand, net value of M&A deals involving Indian companies during 2006, was about $35.6 billion, according to annual data compiled by consulting major PricewaterhouseCoopers. The forecast of net M&A deal value until the end of December this year, according to Bhagat, “will be in the range of $60 billion to $70 billion, excluding any large deals (over $1 billion) that could be announced in the next three months.” […]
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