Amount invested grows more than 45% compared to year ago period.Volatility in public markets leads to pause in exits.
Private Equity firms invested about $2,916 million across 112 deals during the quarter ended June 2011, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity and M&A transaction activity in the country. The amount invested during the quarter was over 45% more than that during the same period last year (which witnessed $1,988 million being invested across 70 deals) but 15% lower compared to the immediate previous quarter ($3,361 million across 91 deals).
The largest PE investment during Q2 ’11 was the Rs.2,250 crore (about $500 million) commitment by Apollo Management to various group companies of the Manufacturing and Infrastructure focused Welspun Group. Other top investments reported during Q2 ’11 included commitments of about $150 million each for thermal power generation firm Diligent Power (by Warburg Pincus), hotel management and investment firm Samhi Hotels (by GTI Group) and airports operator GMR Airport Holdings (by StanChart PE, Old Lane and JM Financial).
The IT & ITES industry received the most number of investments during Q2 ’11 (at 34 deals worth $325 million), followed by BFSI (12 deals worth $275 million). Led by the $45 million investment in online travel services firm Yatra Online, the IT & ITES industry attracted 6 investments of $20 million or more. The BFSI industry was led by three preferential allotments by publicly listed firms - $98 million by leasing firm Magma Fincorp, $65 million by Dhanlaxmi Bank and $43.80 million by ING Vysya Bank. Led by the Rs. 65 crore ($14.4 million) third round of funding for Janalakshmi Financial Services, the Microfinance sector staged a come back of sorts during the period.
Infrastructure-related sectors accounted for 34% of the investments in value terms (16% in volume terms). In the Energy industry, apart from Diligent Power, two renewable power producers raised rounds of over $20 million. The Manufacturing industry continued to receive active investor interest attracting 11 investments worth about $490 million.
Among consumer spending themes, the Food & Beverage industry attracted special attention from PE investors during Q2'11 with significant sized investments in Devyani International (which runs KFC, Pizza Hut and Costa Coffee chains in various parts of India), Sagar Ratna (Restaurant Chain in North India serving South Indian Cuisine) and Prakash Snacks (a maker of Potato Chips & Namkeens)
Exit Activity
Private Equity firms obtained exit routes for their investments in 15 Indian companies during Q2 ’11, including one IPO (that of Sequans Communcations). This compares to 25 exits (including 4 IPOs) in the same period in 2010 and 16 exits (including 1 IPO) in the immediate previous quarter.
Reliance Venture exited from France-based 4G chipmaker Sequans Communications via the company's NYSE listing. Among exits via M&A, the acquisition of BPO firm Intelenet for ?385 million ($632.5 million) by Serco provided Blackstone its first exit it in India.
Real Estate
Private Equity-Real Estate firms made 15 investments (amounting to US$504 million across 10 deals with disclosed values) during the quarter ended June 2011. The pace of investments during the quarter was higher than that during the same period last year which witnessed 9 investments (with $377 million being invested across 8 deals with disclosed values) and also higher compared to the immediate previous quarter which witnessed 12 deals (with $942 million being invested across 11 deals). The largest PERE investment announced during Q2’11 was Warburg Pincus’ investment commitment of over Rs. 1,400 crore to Oceanus Real Estate, a 49:51 joint venture with its existing hospitality portfolio company Lemon Tree Hotels.
The residential segment (including townships) accounted for 73% of the deal volume during the latest quarter. Interestingly, the investments during Q2 ’11 were split equally (5 each) between Southern, Northern and Western India.
About Venture Intelligence
Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in
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