PE deals rise 19% to $2 bn in first qtr

Private equity (PE) investments in India have touched an over one-year high of $2 billion in the January-March quarter of 2010, an increase of 19 per cent over the previous quarter.

Private equity firms invested about $2 billion across 56 deals during the quarter ended March 2010. The amount invested during past three-month period was the highest in the last six quarters, according to a report compiled by deal tracking firm Venture Intelligence.

The figure was 19 per cent higher over the immediate previous quarter (October-December), when PE firms invested $1.68 billion across 102 deals. During the said period the average deal size was high, compared with that in 2009, signalling a return of investor appetite.

"The key trend on the PE investments front during Q1 2010 was the re-emergence of appetite for large deals. For the first time since Q3 2008, the latest quarter witnessed as many as five investments over $100 million," Venture Intelligence Managing Director and Chief Executive Arun Natarajan said.

Among the sectors which saw increased deal flow include IT and ITeS (23 per cent), followed by Banking, Financial Services and Insurance (20 per cent) and energy (13 per cent).

Led by Actis' $50-million investment into BPO company Integreon Managed Solutions, the IT & ITES industry saw 13 deals worth $193 million during the first quarter of 2010, followed by BSFI (9 deals worth $94 million), the report said.

"Instead of rushing for listed company and pre-IPO deals, investors showed preference for slightly younger companies with median sizes of about $11 million," Natarajan said.

The largest investment during the quarter was the $425-million investment by General Atlantic, Morgan Stanley, Norwest, Goldman Sachs and Everstone into power generation firm Asian Genco.

Other top investments reported during the January-March period included Quadrangle Capital Partners' $300-million investment into telecom tower infra company TowerVision India, StanChart PE, KKR and New Silk Route's $217-million investment into Coffee Day Resorts among others.

During the quarter, PE firms also adopted exit route for their investments in 32 Indian companies, including six through IPOs.

"PE and VC investors are continuing to take advantage of the buoyant capital markets in India to exit some of their 3-5 year old investments at healthy multiples," Natarajan said.