PE investments in India dropped 67% for quarter-ended September

There were only two PE investments worth over $100 mn during Q3 2013 compared to five such transactions during the same period last year

The private equity investment in India witnessed a drop of 66.75 per cent for quarter-ended September 2013, compared to the investments for the same period of last year. The private equity firms invested around $1.3 billion across 75 deals during the quarter as against $3.91 billion across 126 transactions during the same period of previous year, said Venture Intelligence, a research service focusing on private company financials and transactions.

The investment for the quarter has decreased around 51 per cent compared to the previous quarter, April-June, 2013, which witnessed private equity investment of $2661 million in 109 transactions. The figures exclude the PE investment into real estate.

In the first nine months of the year, PE investments were $5.06 billion across 281 investments, as against $8.15 billion deals in the first nine months of the previous year across 373 deals, a drop of 37.9 per cent.

IT and ITES companies garnered almost 45 per cent of the PE investments by value in the quarter, including the only two deals above $100 million being in the sector. The sector witnessed transaction of $582 million across 25 investments during the quarter.

“There were only two PE investments worth over $100 million during the third quarter of 2013 compared to five such transactions during the same period last year and eight during the immediate previous quarter,” the research firm announced.

Baring Private Equity Asia bought 41.8 per cent stake in IT service firm Hexaware for $260 million (Rs 1,687 crore) and including the mandatory open offer for an additional 26 per cent stake, the deal value could increase to another Rs 1,508 crore.

The second largest transaction reported during the quarter was e-commerce firm Flipkart’s raising of an additional $200 million from the existing investors including Tiger Global, Accel India, Iconiq Capital and South Africa-based strategic investor Naspers. Besides, Softbank’s com- mitted $75 million to another online commercial firm Snap- deal.com, while the rest of the IT firms raised only below $10 million through PE, it added.

Manufacturing sector saw nine investments with $185 million, which saw three buyouts including Blackstone investing the $74 million (Rs 444 crore) for purchase of a 97.9 per cent stake in Agile Electric and Citi investing $56 million (Rs 338 crore) purchase of a 51 per cent stake in Sansera Engineering.

Healthcare and Life Sciences sector witnessed an infusion of $140 million across 14 investments. Venture Capital investments accounted for 52 per cent of the investment in terms of volume, compared to 54 per cent the same period last year.

The share of buyout deals increased to 9 per cent of the deals in terms of volume from 3 per cent in the same period in 2012. Late stage deals declined to 12 per cent from 19 per cent, while the share of listed company investments rose to 17 per cent from 14 per cent during same period last year.

In real estate, the PE firms made seven deals, of which five deals with disclosed values was around $199 million, while during quarter-ended June, 2013, a decrease from nine transactions worth $394 million during the previous year, added the research firm.

One of the largest PE investment into real estate during the third quarter of 2013 was the real estate investment unit of StanChart entering into a joint venture with publicly listed Mahindra Lifespaces that is to invest Rs 1,000 crore across various projects beginning with two premium residential developments totalling 1.55 million square feet in Gurgaon and Bangalore.