Providence has emerged as the biggest private equity(PE) investor in the first half of this year in India while ICICI Venture, Sequoia and Citigroup have been the most active firms in terms of number of PE transactions announced. The period, which coincided with the first major prolonged market correction over the last three years, also saw PE activity dipping in volume terms for the first time year-on-year.
In all, there were 186 deals worth $7.09 billion during H1 2008 against 195 transactions with a value of $6.77 billion during the first half of last year. Moreover, even as new PE firms set shop in the country, the number of funds striking at least one deal has dropped considerably from 125 funds in H12007 to 90 in H12008, according to data compiled by advisory firm Grant Thornton.
Says Grant Thornton, partner, specialist advisory services, CG Srividya, “Last year, the flow of PIPE deals was very strong, but this has come down due to the market crash. Secondly, some large global banks have become more cautious in striking deals, which has affected transaction volume.”
However, this didn’t stop some top PE/VC funds from pouring money into India. While some heavy hitters of last year such as Carlyle, Temasek and Trinity were absent from the big league, others stepped up.
Topping the list in terms of investments value was Providence, which struck one large transaction by picking 20% sake in Aditya Birla Telecom for $640 million. Incidentally, last year Carlyle had emerged as the largest PE investor in the first half by virtue of one large transaction when it picked a minority stake in HDFC.
The other large PE investors in terms of quantum of funds this year include Symphony Capital, US-based hedge fund DE Shaw followed by Citigroup (through CVC and Citigroup Property Investors), KKR, Orient Global Tamarind Fund and ChrysCap, which recently picked shares through secondary market transactions in various firms.
In terms of volumes, ICICI Group(ICICI Bank along with ICICI Venture) followed by Sequoia and Citigroup emerged as the most active PE groups in India with 6-8 deals each. Says Sequoia Capital India managing director Sandeep Singhal, “We invest based on fundamentals of companies and there hasn’t been any significant change in that for many firms. Most of our deals have been in privately held firms. Though valuations in the private space move with a lag with respect to public markets, entrepreneurs are practical and are willing to accept the market reality.”
ICICI Venture invested in companies such as PVR Pictures, Medicare Synergie, Vikram Hospital, Arrow Webtex and Sahyadri Hospitals, besides the parent ICICI Bank co-investing with SBI in Jaiprakash Power Ventures.
While Sequoia brought in additional rounds off funding in some of its existing portfolio companies , Citigroup’s investments include four separate transactions with BPTP group led realty projects. Some of the other active PE deal strikers in the first half include Blackstone, Axis Bank(along with its PE arm), De Shaw and Kotak. Last year the more active PE players were: Citigroup, IDFC Private Equity, Warburg Pincus and ICICI Venture.
Source: EconomicTimes