Improving market sentiments post parliamentary elections seem to have begun showing in the private equity investment space.
Private equity investments in June 2009 increased 74% in value terms and 20% in number of deals as compared with May 2009 figures, according to monthly private equity update by Anand Rathi Investment Banking Research (ARIBR).
According to data compiled by ARIBR analysts Arnab Banerjee and Sachin Mehta, overall, investments worth $662.7 million were made across 24 deals – as against $332.7 million and 20 deals in May 2009.
“The substantial surge in deal value was primarily driven by the real estate and the telecom sectors. Besides, with a surge in the stock market, there were private equity backed merger and acquisition (M&A) exits in the sectors like energy, healthcare, manufacturing and IT/ITeS,” the analysts said.
Industry experts, however, are of the opinion that a number of deals were facing protracted negotiations owing to valuation and related hurdles.
With entrepreneurs now getting realistic in their expectations that are in line with the PE valuations, the deals are now going through, they said.
Manoj Saha, managing editor of IVCJ PE Journal for India, said it is more to do with the psychology than surge in the stock market prices. “It would be inappropriate to link the increased investments to improving market sentiments. It is the actual conclusion of a huge pipeline of deals that were going on for sometime now,” Saha said.
Of the 24 deals concluded the largest were those made by Fire Capital and IDFC PE along with Oman Investment Funds in the real estate and telecom towers space. While Fire Capital invested $250 million for a 75% stake in Arcor Group's SPV for an integrated project in Nagpur, Quipo Telecom Infrastructure diluted undisclosed stake for $150 million invested by IDFC PE and Oman Investment Funds.
In terms of exits, June saw four PE backed M&A exits and one IPO exit. The PE backed exists were by Indus Venture Management (Conzerv Systems), ICICI Venture (Vetnex – RFCL Animal Health Business), India Value Fund (Gala Precision Technologies) and IFC, New Path Ventures, NEA and BlueRun Ventures (Nevis Networks) while NYLIM India exited its investment in Mahindra Holidays & Resorts.
Source: DNA India