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Private Equity investments in India aggregates over $11bn in 2011, Four-S reports

Posted by fairval on January 5, 2012

2011 PE activty data from Four-S

Mumbai, January 3, 2012: The year 2011 saw 427 PE/VC deals worth $11.19bn compared to investments worth $7.96bn across 328 deals in 2010, shows data with research and financial consulting firm, Four-S Services. With drying-up of the public market as well as debt becoming costlier, India Inc. turned to PE investors for fresh funding.

The year also saw a surge in number of high value deals – there were 30 deals above $100mn in value (worth $5.91bn; 53% of total investments) compared 19 deals (worth $3.46bn) in 2010. Correspondingly, the average deal size for the year went up by 16% to $32.9mn.

The largest PE investment during the year was the $851mn commitment by Bain Capital and Singapore’s GIC to Hero Investments, the Hero group holding firm which is to buy out Honda Motors’ 26% stake in listed two-wheeler maker Hero Honda. This was followed by Apax Partner’s $480mn investment in NASDAQ-listed iGate Corp to buy Patni Computers. In another mega deal, Apollo Global Management invested $290mn in Welspun Corp as a part of its $500mn commitment to the Welspun Group. Blackstone Group’s owned Sithe Global Power invested around $261mn investment in SKS Chhattisgarh Power Generation. TPG committed $259.9mn to Shriram Capital, rounding up the top 5 investments of the year.

Infrastructure (including power) continues to remain one of the key investment themes for PE players. The sector topped the investment chart accounting for 27.8% of investments with a deal value of $3.11bn. The scale of deficit and government commitment to fund infrastructure projects, makes private participation in the sector one of the most compelling investment themes leading to growing PE’s interest.

The manufacturing sector occupied the second slot in terms of PE investments and totalled $2.02bn across 66 deals; this translates into 18.1% share. The sector was marked by some high value deals, including the largest transaction during the year – Bain Capital, GIC’s $851mn investment in Hero Investments.

The BFSI sector came next with $1.36bn investments across 40 deals. Fund managers believe that there are enough opportunities for private equity in virtually every facet of the financial services industry considering the rising income levels, focus on infrastructure spending, emphasis on financial inclusion, emergence of wealth managers and expected growth of the insurance industry.

However, the year was not so good for private equity exits. Against the backdrop of a difficult public market, PE exit volume fell 35% to 80 deals while value fell 49% to $2.69bn. This is in sharp contrast to 2010 when exits hit a record and there were 124 exit transactions worth $5.30bn on the back of robust capital markets. Fund managers were unable to match their exit timing with desired returns, and held back their portfolios.

Table: PE/ VC investments in India

 

2007

2009

2009

2010

2011

Investment ($bn)

y/y growth (%)

19.20

157%

11.16

-42%

4.25

-62%

7.96

87%

11.19

41%

No. of deals

382

344

250

328

427

Average deal size* ($mn)

57.2

38.8

20.9

28.4

32.9

* calculated over disclosed transactions

Source: Four-S Services

Table: Top 5 PE deals in 2011

Investors Target

Stake (%)

Amount ($Mn)

Sector – Industry
Bain Capital, GIC Hero Investments

29

851

Manufacturing – Auto
Apax partners iGate Corp (Patni acquisition)

NA

480

Services – IT/ITeS
Apollo Global Management LLC Welspun Corp

NA

290

Manufacturing – Metals
Blackstone SKS Chhattisgarh Power Generation

NA

261

Infrastructure –

Power

TPG Shriram Capital

15.0

260

Services – BFSI

Source: Four-S Services

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One Response to “Private Equity investments in India aggregates over $11bn in 2011, Four-S reports”

  1. Thanks for sharing your thoughts on stock options trading quotes.
    Regards

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