PE investments surge 22% in year till date

Private equity (PE) investments into India have risen by around 22 per cent in 2011 till date over the corresponding period of last year, to $7,160 million (Rs 32,220 crore), and the number of deals rose by around nine per cent.

According to data compiled by Venture Intelligence, from January to August (till date), PE firms had invested this amount across 246 deals, compared to $5,831 mn (Rs 26,235 crore), across 226 deals in the same period in 2010.

In 2011, investments were led by manufacturing ($1,398 mn across 22 deals), followed by information technology and IT-enabled services ($1,029 mn, 70 deals), engineering and construction ($796 mn, 16 deals), BFSI (banking, financial services and insurance, $790 mn, 24 deals), energy ($684 mn, 19 deals), food & beverages ($275 mn, 10 deals), health care & life sciences ($186 mn, 15 deals), other services ($137 mn, 11 deals), education ($93 mn, 10 deals) and textiles and garments ($80 mn, eight deals).

Top deals include $828 mn by GIC and the Government of Singapore Investment Corp in Hero Investments in March; $375 mn by Apax Partners in iGate in January, $292 mn by Apollo Global Management in Welspun Corp in July; $81 mn by Standard Chartered PE in Reddington in July; Blackstone's $200 mn investment in Manyata Promoters in July; $200 mn by SBI-Macquarie in GMR Airports Holding and $200 mn by Goldman Sachs, Everstone and others in Indostar Capital Finance.

“PE investors made the best of the slight improvement in market conditions and sold stakes in listed investments made in 2005-2006. While there were a few exits through secondary stake sale and buybacks, the IPO markets continued to stay shut,” according to VCCedge, a research platform of VCCircle.

Large exits included Warburg Pincus selling 2.28 per cent in Kotak Mahindra Bank for $172 million and ChrysCapital shedding 2.7 per cent in telecom firm Idea Cellular for $170 million.

Experts says domestic consumption and infrastructure will continue to be the major attractions for investors. The Indian infrastructure sector is expected to attract $1 trillion in the next five years, of which the private sector is expected to invest around $500 billion. A minimum of 10-15 percent of this would be PE funds.

A report titled India Private Equity Report 2011 by Bain & Co stated, “The fundamentals look auspicious for PE in India to continue to grow and evolve in 2011 and beyond. Short-term nervousness in the capital markets in 2011 and high-priced corporate debt are expected to keep valuations down. That is likely to help open interesting deal-making opportunities.”