PE investments more than double in Sept quarter

Private equity (PE) firms invested about $2,047 million across 88 deals during the quarter ended September 2010, according to a study by Venture Intelligence, a Chennai-based research firm focused on private equity and M&A transaction activity in India.

This takes the total PE investments in 2010 to $6,566 million across 231 deals, more than twice the $2,502 million invested (179 deals) during the same period in 2009. These numbers do not include PE investments in real estate.

The amount invested during the third quarter of 2010 was little over twice that during the same period last year, when around $976 million was invested across 65 deals, but lower than the $2,364 million across 71 deals in the immediate previous quarter.

“For the first time since the first quarter of 2009, the amount invested by PE firms has dipped when compared to the immediate previous quarter,” said Arun Natarajan, managing director and chief executive officer of Venture Intelligence.

He said given the rapidly rising public markets and strong prospects for initial public offers (IPOs), this was probably a better time for PE investors to focus on exits rather than place big investment bets.

The largest investment during the third quarter of 2010 was SBI-Macquarie’s $304-million investment into Viom Networks. Other top investments reported during the quarter included Blackstone’s $300-million investment into Moser Baer Projects, followed by Actis’ $100-million investment in IDFC.

The information technology & information technology-enabled services industry registered 24 deals, worth $126 million, during the quarter, followed by the banking, financial services and insurance industry (13 deals worth $312 million) and energy (nine deals worth $522 million). Venture capital and late stage investments accounted for 31 and 28 deals, respectively. Late stage deals accounted for 56 per cent of the investments in value terms.

PE firms obtained exit routes for their investments in 27 Indian companies during the quarter, including two via IPOs (Gujarat Pipavav Port and MakeMytrip.com), compared to 23 exits (including two IPOs) in the same period last year as well as in the immediate previous quarter (including five IPOs).

The largest exit via merger & acquisitions included JP Morgan, IDFC PE’s exit from L&T-IDPL (via buyback by L&T) and Kubera Partners’ sale of its stake in Venture Infotek (to European IT services firm Atos Origin). The largest exit via public market sale was ChrysCapital’s exit of its stake in Bajaj Auto Finance.