With the initial public offerings (IPO) market drying and debt getting dearer by the day, private equity (PE) has become the lender of last resort for companies. Deals in the space are increasing and getting bigger, as promoters are willing to take a few steps more on the road to reasonable valuation. Avinash Gupta, head, financial advisory, Deloitte India, also feels promoters are more eager to strike deals than in the past. “Promoters feel fundraising will be tougher in the next six months, due to factors such as increased borrowing interest rates and soft share market. They feel this could be the right time for fundraising.” Even funds have become more reasonable in their expectations, leading to more transactions. “Given the fact of high valuation in pre-recession times and thereafter a lack of general conviction to transact, the current time offers a sense of reasonableness for both, the buyer and the seller, resulting in a greater deal flow,” said Abhijit Joshi, senior partner and CEO, Western Region, AZB & Partners.. […]

Sluggish stock markets have helped increase private equity investments significantly in India as several companies that were looking to raise funds from public are now trading the PE route. “Sluggish stock markets have in a way helped the PE investment activity – a number of companies which had filed for IPOs or were looking to raise money on public markets are now actively looking to raise money from PE,” Ernst & Young Partner Private Equity Mayank Rastogi said. Overall, PE investments in India have been growing in the past few years. According to global consultancy firm Grant Thornton, over the past 6 years (2005-2011), they have touched USD 50 billion. In comparison, capital raised through Initial Public Offering ( IPO) in this period was USD 31 billion. Avinash Gupta Leader Financial Advisory, Deloitte in India said, “Whenever public markets go soft, PE has a good time because they have money. Besides, in India, corporate growth is driven on the basis of getting equity and possibly by leveraging it further. So they tap PE.” […]

Pedigree American venture capitalist Sequoia Capital has bought $30 million stake in Indore-based Prakash Snacks, makers of Yellow Diamond brand potato chips, as large financial investors aggressively chase tier-II food and beverage brands appealing to India's broader consumption story. Sequoia, one of the most influential growth capital providers from silicon valley, is believed to have acquired a significant minority stake in Prakash Snacks, with reported turnover of Rs 250 crore and Rs 30 crore in net profit. The firm is also a supplier of private labels to the country's expanding organized retail industry. Sequoia Capital IndiaMD VT Bhardwaj confirmed the just-concluded $25-30 million investment in Prakash Snacks. Last year, private equity giant Carlyleinvested Rs 102 crore in the South-based Tirumala Milk Products, which started as a small town enterprise at Narasaraopet in Guntur district of Andhra Pradesh. […]