India sees PE exits worth $757 mn in 2 months

Private equity (PE) players in India have offloaded stakes worth $757 million in the first two months of this year driven by a significant recovery in the stock markets and hopes of continuation of this trend, believe experts.

According to VCCEdge, the financial research platform of VCCircle, January 2010 saw 13 exits worth $282 million, while February witnessed as many as 10 worth $475 million.

"PE funds are under pressure to make some exits before they set out to raise new funds. They will continue to use every opportunity available to exit as long as they see a good return," VCCEdge Research Director Rohit Madan told PTI.

On a similar note, Reliance Venture Asset Management CEO Harshal J Shah said, "I think this year will see the opening of the floodgates for exits, though only for the highly qualified ones, and those which have been waiting patiently in the wings for a long time now."

Shah further said the companies which were waiting in the pipeline might hit the markets this year.

"As the foundation for a strong global recovery builds up, perhaps led by India and China, the performance of the markets this year for such IPOs will also portend or forecast how successful that trend will be into the next year and beyond," Shah added.

According to SMC Capitals Equity Head Jagannadham Thunuguntla, "The strange part of 2009 recovery was that it was very strong in the secondary markets. However, the same enthusiasm couldn't be seen in the primary markets, that is IPOs. Hence, exits can definitely happen. Unless the enthusiasm returns in the primary markets, the PE/VC funds may find it difficult even to exit."

Some of the top private equity exits of this year include that of the $323-million by Siva Ventures from Aamby Valley Ltd and of $62-million by Nalanda Capital from Sun TV Network, the VCCEdge report said.

The PE exits were driven by the sharp rise in the Bombay Stock Exchange's benchmark index Sensex, which is currently hovering around the 17,000-level and is witnessing good participation both from domestic as well as foreign institutional investors.