Private equity investment in India in 2009 is expected to tumble by more than a third to $5 billion to $7 billion, similar to the fall in 2008, as investor aversion rises and asset owners stick to high price expectations, industry players said. PE firms will also be busy tending to Indian portfolios battered in the stock market meltdown, speakers at a private equity conference in Mumbai said on Thursday. “The sustainable private equity deal volumes in this market would be just about 50 percent of the last couple of years,” Puneet Bhatia, managing director at PE firm TPG, said at the conference. “The price of being prudent and diversified has just not delivered,” he said, referring to the sharper fall in developing market indices than in major industrial markets. […]

Set back by the economic downturn, foreign and domestic private-equity firms in India are spreading the risk of investing in assets by banding together. Firms are resorting to clubbing together to form a syndicate when acquiring stakes to limit both funding requirements and risk. “Over the next 12 months, there will be much more syndication of deals and the insistence (by the lead investor) of having other co-investors to bring additional risk bearing capacity,” said Jasmin Patel, Managing Director, FIL Capital Advisors (India), Fidelity's India-focused private equity and growth capital fund. “The capital required to get a funded firm to a certain maturity point has gone up, so the presence of another investor from a growth perspective and the amount of capital required is becoming a prerequisite,” Mr. Patel said. Syndication is where two or more private equity firms participate in investing in a company, each putting in part of the total equity package for proportionate amounts of equity — usually with one private equity firm acting as lead investor. […]

As stock markets around the world continue to tumble, private equity (PE) players are sensing an opportunity in the foreign currency convertible bonds (FCCBs) issued by Indian companies. Most of the FCCBs are trading at a discount of 30 to 70 per cent now. And given the tight financial situation internationally, many investors could be desperate to raise cash by selling them. Some PE firms are looking at companies whose FCCBs are maturing in the near future. Vedika Bhandarkar, managing director and head of investment banking, JP Morgan India said, “If it is a fundamentally good company and the bond is available at a huge discount, it makes sense to go for it.” […]

Mergers and acquisition (M&A) activity in the Asia Pacific region did not escape unscathed from the effects of global financial crisis that originated in the US. According to a study by ICICI Bank Global Investment Banking Group, overall M&A value dipped by 5% while deal volumes fell by almost 17% during 2008. During the year, Greater China dominated the M&A scene, closely followed by Australia, Japan and Hong Kong. Of the overall deals done in Asia-Pacific, China accounted for over 22% deals in the Asia-Pac region. Deal value for the region jumped from $101 billion in 2007 to $155 billion in 2008, making up more than 39% of the total deal value in Asia-Pacific. Indonesia also posted a strong gain, nearly quadrupling ts deal value to $19 billion. However, Japan (accounting for over 15% of overall deals), Australia (17%), India (6%) and Malaysia (1.5%) saw marked declines in deal values. […]