PE investments down 31% in Apr-Jun

IT & ITeS sectors get a fifth of the total, energy & healthcare follow

Private equity (PE) investment into India continues to slip. According to a recent report, investment by PE firms were down by 34 per cent over a year in the quarter ended June, to a little below $1.9 billion. These do not include PE investments in real estate.

According to a study by Venture Intelligence, a research service focused on PE and mergers & acquisition (M&A) transaction activity in India, PE firms invested $1.85 bn across 102 deals during the quarter ended June. The figure in the same period last year was $2.8 bn across 126 transactions and also 10 per cent less than during the immediate previous quarter, which reported $2.05 bn investment across 103 transactions.

“There were only four PE investments worth over $100 million, with one above $200 mn, during the second quarter of 2012, compared to 10 such transactions in the same period last year and six during the immediate previous quarter,” according to Venture Intelligence.

SOUTHWARD-BOUND

• PE firms invested $1.85 bn across 102 deals during the quarter ended June 
• The figure in the same period last year was $2.8 bn across 126 transactions
• There were only four PE investments worth over $100 million
• The largest PE investment during the quarter was Morgan Stanley Infrastructure Partners’ investment of Rs 1,200 crore in Continuum Wind Energy
• Information technology & IT-enabled services companies attracted $379 mn, about 21 per cent of the value pie
• The energy industry claimed the second spot with five renewable power project deals, which attracted $299 mn
• Healthcare & life sciences companies came third, attracting $243 mn across 12 investments 
• It was followed by banking financial services and insurance firms, with $232 mn across 10 investments
• PE real estate firms made seven investments amounting to $162 mn across six deals with disclosed values during the quarter ended June

The largest PE investment during the quarter was Morgan Stanley Infrastructure Partners’ investment of Rs 1,200 crore in Continuum Wind Energy, a Singapore-headquartered developer of wind assets in India. The second largest investment during the period was Fairbridge Capital acquiring a 77 per cent stake in publicly listed travel services firm Thomas Cook (India) for Rs 817.4 crore. Warburg Pincus’ acquisition of a 53.67 per cent stake in publicly listed consumer finance company Future Capital Holdings for Rs 563 crore was the third largest.

Information technology & IT-enabled services companies attracted $379 mn, about 21 per cent of the value pie, across 42 reported investments during the quarter, snatching the lead from healthcare & life sciences (HLS, that topped the immediate previous quarter) as the favourite sector for PE investments during the earlier quarter.

Powered by five renewable power project deals, which attracted $299 mn between them, the energy industry claimed the second spot. HLS companies came third, attracting $243 mn across 12 investments. It was followed by banking financial services and insurance (BFSI) firms, with $232 mn across 10 investments.

IT & ITeS investments were dominated by follow-on rounds at various VC-backed online services companies. Such as local listings firm JustDial, which attracted $60 mn from existing investors Sequoia Capital and SAP Ventures, and advertising-focused Pubmatic, raising $45 mn, led by new investor August Capital, and classifieds-focused Quikr, which raised $32 mn in a round led by new investor Warburg Pincus.

In energy, the Continuum deal, was followed by IFC’s investment of $40 mn in equity (apart from $90 mn in debt) in wind energy firm Inox Renewables. The third largest investment in the sector was AMP Capital’s $29 mn investment in Shalivahana Green Energy, which operates a portfolio of power generation assets across the agri-waste, hydro and wind sectors.

VC-type deals (in volume terms) accounted for 54 per cent of the investments during the quarter, compared to 44 per cent in the corresponding period a year before. The share of late stage deals, at 23 per cent of the PE investments during the quarter, was slightly lower than compared to the same period a year before, at 25 per cent. The share of listed company investments was flat at nine per cent.

Real estate
PE real estate firms made seven investments amounting to $162 mn across six deals with disclosed values during the quarter ended June. The volume was less than half the 18 investments in the same period the previous year, which witnessed $553 mn being invested across 14 transactions with disclosed values and also the 17 investments ($573 mn across 15 deals) during the January-March quarter.

Morgan Stanley Real Estate Investment's Rs 500-crore commitment to Supertech's township project in Noida, Cape Town, was the largest during the latest quarter. Supertech also attracted a Rs 100 crore commitment from US-based Walton Street Capital towards the residential towers to come up at its mixed-use project, Supernova, at Noida.

The Government of Singapore Investment Corporation invested Rs 100 crore to enable the Brigade Group, a listed real estate developer, to buy land in Bangalore's Whitefield to develop a premium housing project.