PE investment in India for 2013 lowest in four years

PE investment numbers in 2013 down over 18.5% compared to $9.2 billion (across 484 deals) invested in 2012

Private Equity firms invested $7.5 billion (over 384 deals) in India during the 12 months ending December 2013, representing one of the lowest levels of investment made in the last four years in both value and volume terms.

According to analysis by Venture Intelligence, a research service focused on private company financials, transactions and valuations, 2013 PE investment numbers, were down over 18.5% compared to the $9.2 billion (across 484 deals) invested in 2012.

Led by KKR’s $460 million investment in Alliance Tire Group, the four largest investments during 2013 involved global PE investors buying majority stakes from existing investors.

The Alliance deal was followed by three in the IT Outsourcing sector: the $443 million buyout of publicly listed Hexaware Technologies by Baring Asia; the $420 million buyout of GlobalLogic by Apax Partners; and the $270 million buyout of CSS Group by Partners Group. The 18 investments of over $100 million in value during 2013, accounted for as much as 47% of the value pie during the year.

With 154 investments worth about $2.3 billion, Information Technology and IT-Enabled Services (IT & ITES) companies topped in terms of both investment value and volume during 2013. The mega buyout transactions in the mature IT Services sector were followed by leaders in the sunrise E-Commerce sector - Flipkart and Snapdeal – that received reported commitments of about $500 million between them during the year.

Year 2013 also witnessed PE firms betting serious dollars on Indian IT products firms going global, a trend exemplified by Silver Lake Partners leading a $40 million round in commodities trading software firm Eka Software for the US-based PE firm’s inaugural investment in India.

The Healthcare & Life Sciences industry was the next largest destination for PE investments in 2013 attracting $1.2 billion across 57 transactions. Here too, the top three transactions involved secondary purchases from existing investors – the $200 million investment in Gland Pharma (by KKR); the $161 million investment in Dr.Naresh Trehan promoted hospital Medicity (by Carlyle); and the $113 million investment in Emcure Pharmaceuticals (by Bain Capital).

Led by KKR’s Alliance Tire buyout, Manufacturing companies attracted about $1.1 billion from PE investors during 2013 across 30 transactions. Baring Asia's INR 1,400 crore (about $233 million) investment in Lafarge India, the Indian subsidiary of French cement giant Lafarge, was the second largest transaction, followed by buyouts of two more auto components firms: Agile Electric (by Blackstone) and Sansera Engineering (by Citi).

The BFSI industry came in next attracting $727 million across 44 transactions, led by banking aspirant JM Financial Products; the private sector Ratnakar Bank; microfinance companies Janalakshmi and Equitas; and non-banking lenders like Cholamandalam, Hinduja Leyland Finance and Repco Home Finance.

Buyout deals which accounted for less than 5% of the PE investments in volume terms during 2013, accounted for as much as 27% of the value pie. Late Stage deals accounted for 20% of the investments in volume terms and about 27% in value terms during 2013, the Venture Intelligence research showed.

Venture Capital investments accounted for 53% in volume terms and 11% in value terms. Acquisition of minority stakes in listed companies accounted for 14% in volume terms and 10% in value terms.