Private Equity (PE) firms invested $8,853 million (Rs 48,691.50 crore) over 406 deals in India during 2012, compared to the $10,378 million (Rs 57,079 crore) across 483 deals during the previous year, according to analysis by Venture Intelligence, the research service focused on private company transactions and financials.
These figures, which include venture capital (VC) investments and exclude PE investments in real estate, take the total investments by PE firms over the past five years to about $41.4 billion (Rs 227,700 crore) across 2,036 transactions.
The latest data reveals that PE investments in October-December 2012 declined more than 32% to about $1,010 million (Rs 5,555 crore) across 82 deals compared to the $1,490 million (Rs 8,195 crore) invested across 121 deals in the same period in 2011. And $3,849 million (Rs 21,169.50 crore) invested across 108 deals in the preceding quarter.
"PE managers are being more judicious and taking longer period to deploy their funds," said KEC Raja Kumar, founder & CEO of leading Bangalore-based PE firm Ascent Capital. The fact that the environment has continued to be challenging for new fund raising has also contributed to the investment slowdown. "Limited Partners (LP) interest in Indian PE funds continues to be lukewarm. This would change provided the current rally in public markets results in exit realisation for PE funds," Raja Kumar added.
The two largest PE investments in 2012 were both in the BPO sector --- the $1,100 million (Rs 6,050 crore) buyout of medical transcription specialist M*Modal by JP Morgan unit One Equity Partners and the $1,000 million (Rs 5,500 crore) investment by Bain Capital and GIC in Genpact. Then happened Morgan Stanley’s $210.5 million (Rs 1,157.75 crore) commitment to Continnum Wind Energy, a Singapore headquartered firm developing wind assets in India’s Kutch region.
With 162 investments worth about $3,243 million (Rs 17,836.50 crore), Information Technology and IT-Enabled Services (IT & ITES) companies topped in terms of both investment value and volume in 2012. The $150 million (Rs 825 crore) fourth round investment raised by e-commerce leader Flipkart was the next largest after the two mega BPO deals in the IT industry.
Powered by four investments worth $100 million (Rs 550 crore) or more in the hospitals segment, the Healthcare & Lifesciences industry absorbed $1,225 million (Rs 6,737.50 crore) across 48 deals. Led by Warburg Pincus’ $145 million (Rs 797.50 crore) buyout of listed NBFC firm Future Capital, the BFSI industry was the third favourite accounting for $890 million (Rs 4,895 crore) across 43 deals. Energy companies came in next attracting $478 million (Rs 2,629 crore) across 20 investments.
Late stage deals accounted for 24% of the investments in volume terms and 26% in value terms. Buyout deals accounted for 4% of volume and 22% of value. VC investments accounted for 51% of volume and 9% of value. Listed company investments accounted for 13% of volume and 25% of value.
While companies in South India attracted the most number of investments (162 deals worth $2,460 million or Rs 13,530 crore), companies based in Western India attracted the maximum PE capital in terms of value ($3,799 million or Rs 20,894.50 crore across 126 deals) in 2012. Companies in North India attracted investments worth $2,370 million (Rs 13,035 crore) across 92 deals.
Among cities, Bangalore-based companies attracted the most number of investments (88 investments worth $1,170 million or Rs 6,435 crore), followed by companies in the National Capital Region (with 87 investments worth $2,319 million or Rs 12,754.50 crore). Mumbai-based companies attracted 85 investments worth $2,856 million (Rs 15,708 crore).
With 17 investments each during 2012, Sequoia Capital India, IFC and Accel India were the most active PE investors in India in 2012. Among seed level funds, Blume Ventures was especially active investing across 23 transactions during the year. JP Morgan vaulted to the top of the value charts for the year with $1,265 million (Rs 6,957.50 crore), while Bain Capital followed next with its $850 million (Rs 4,675 crore) investment in Genpact. IFC came in third with investments worth $495 million (Rs 2,722.50 crore).
PE-Real Estate firms made 43 investments in the realty segment in 2012, the analysis showed. Of these, 35 transactions had an announced value of $1,145 million (Rs 6,297.50 crore). The activity level was almost 38% lower compared to the 69 investments ($2,693 million or Rs 14,811.50 crore across 54 announced deals) in 2011. Residential projects accounted for 65% of the investments (volume) in 2012, followed by commercial projects with a 16% share of the pie.
Blackstone’s proposal to acquire a stake in the office space portfolio of Bangalore-based developer Embassy Property Developments for a reported $230 million (Rs 1,300 crore), was the largest reported in 2012. The other large PERE investments during the year included Morgan Stanley’s $94 million (Rs 500 crore) investment in Supertech’s township project in Noida and the same investor’s $90 million commitment in Sheth Developers.