PE/VC investors took home $6 billion via share sales in Jan-July 2015

Companies in IT & ITES, BFSI, telecom and media industries lead the list of successful exits

Calendar year 2015 has emerged as the best one for exits by private equity and venture capital investors in India. They realised a little over $6 billion (Rs 38,000 crore) via share sales in January–July. According to Venture Intelligence data, the seven-month figure is up by 33 per cent, higher than the earlier full-year best of $4.5 bn realised by investors in the past five years.

Companies in information technology and IT-enabled services; banking, financial services and insurance; telecom, and media & entertainment sectors led the list of successful exits in 2015, returning $2.4 bn, $1 bn, $770 mn and $280 mn, respectively, to investors.

In IT & ITeS, some international PE investors have made “healthy” exits. These include the acquisition of iGate by Capgemini for $4 bn, enabling Apax Partners to take home $1.3 bn or about three times the return on its 2011 investment. ATM management services firm CMS Info Systems saw majority stakeholder Blackstone trade its holdings to incoming PE investor Baring Asia for about $250 mn. Internet & mobile services-focused Tiger Global had its first significant exit in the Indian market by completing the sale of its shares in publicly listed local search firm Justdial, realising a 13-times return on its investment.

These seven months also saw consolidation among PE/VC-backed companies in the internet & mobile sector, using share swap arrangements.

This included the acquisition of mobile recharge and coupon entity Freecharge by Snapdeal (providing an exit route for Freecharge investor Sequoia Capital India) and TaxiForSure (backed by Blume Ventures, Accel Partners, Helion Ventures and Bessemer Ventures) by fellow taxi hailing app maker Ola.

PEs  have also made good money by selling stakes in publicly listed BFSI  companies. TPG Capital sold its 20 per cent stake in Shriram City Union Finance for around Rs 2,500 crore to Apax Partners, fetching itself a 4.6-times return on its 2008 investment. ChrysCapital and ICICI Venture exited ING Vysya Bank with returns of 3.6 times and 2.7 times, respectively, according to Venture Intelligence analysis.

Telecom towers firm Bharti Infratel provided international PE investor KKR with its first exit in the Indian market, with a 1.75-times return on its Rs 989 crore December 2007 investment. ACT Broadband witnessed TA Associates purchasing the stake held by India Value Fund Advisors from one of its earlier funds for $200 mn (Rs 1,260 crore). M&E saw PVR Cinemas, Dish TV, Ortel Communications and UFO Moviez serve big exits to their PE investors. While L Capital Asia completely exited PVR with a 3.46-times return, Apollo Management exited Dish TV partially, with a 2.46-times return.

PE/VC investors also realised a little over $2 bn via strategic sales (i.e. sale of stake in the portfolio company to a larger company) between January and July, about $200 mn more than the $1.8 bn realised in all of the previous best year of 2005.

Notable exits via this route in 2015 include Capgemini’s acquisition of iGate, the acquisition of Freecharge by Snapdeal and IDFC PE-backed Green Infra by Sembcorp Industries (for $170 mn).

Exits through secondary sales (via acquisition by another PE firm) hit $1.6 bn in 2015, exceeding the previous (full year) high of $1.5 bn (in 2013). Prominent exits via this route included Blackstone’s from CMS Infosystems (via sale to Baring Asia) and ChrysCapital’s exit from Mankind Pharma with a 13-times return (via a stake sale to Capital International for $203 mn).

PE/VC investors also sold shares worth $1.9 bn in already listed companies (like Shriram City Union Finance, ING Vysya Bank, etc) via the public markets in the first half of 2015.

“With a number of PE-backed IPOs picking up, Venture Intelligence expects exits via the public market sales route to also exceed the previous high by year-end. The year is also likely to be the best in terms of profitability of the exits. The first seven months of the year had provided PE investors with 16 exits in the three to five times return range,  seven exits in the five to 10 times range and three that fetched more than 10 times the invested capital," said Venture Capital.

Boom Year for Private Equity Exits