PE in listed firms suffers $2.24 bn loss in '08

Private equity investments in public firms have tanked as much as $2.24 billion so far this year, thanks to the massive erosion in equity markets as well as the present economic downturn, a latest study says.

"Due to continuous downfall and rough market conditions of 2008, the overall till-date-return on PIPE deals of 2007 (on volume basis) is at (-42.37 per cent) aggregating to a loss of $2.24 billion," Nexgen Capitals, the merchant banking arm of brokerage firm SMC Global Securities, said in its latest report.

An analysis of private investment in public equity in 2007 shows that these deals in the country have lost funds to the tune of $2.24 billion till December 17 this year.

Total investment in PIPE deals of 2008 were $5.29 billion, while the current mark to market values stand at $3.05 billion.

Amid the downturn, telecom, emerged as the only sector that survived the downturn and registered gains of as much as 10 per cent. Beside telecom, all the other sectors reported losses and the hardest hit were Banking, Financial Services and Insurance (BFSI), healthcare and retail.

"Wealth destruction is all pervasive irrespective of the sector and irrespective of the stock. Still, telecom sector weathered the volatile capital market conditions," the report added.

An analysis of industry-wise return till December 17 shows that IT & ITeS suffered loss of 74.09 per cent, BFSI (32.37 per cent), infrastructure (71.84 per cent), healthcare and life sciences (42.66 per cent), retail (91.43 per cent), media (75.35 per cent), manufacturing (73.07 per cent) and real estate (76.42 per cent).