Private equity in india

May | 2013Overview of PE in India 2005-12 | Ayush Agarwal

Private equity in india

Table of ContentsExecutive Summary3Overview3Private Equity investments data and analysis3Sector wise PE deals6Large PE deals during 2005-20078Number of Private Equity Investors in India9Top Private Equity firms in India9Most active PE firms in 201211

Executive SummaryOverview

Reformatory steps from the government, seemingly keen to appease the investor community, provided a big boost to investors sentiments during Q4. The revival in the stock markets also helped. The public market saw one of the largest (756 million USD) successful IPO in recent times from Bharti Infratel, in which some of the private equity investors made a partial exit. The 835 million USD exit of Carlyle from HDFC further underlined the significance of the positive mood and revived the appetite of investors.Interestingly, this did not reflect in investment from PE funds, either because private equity players are still waiting to be convinced about the governments real intentions or simply because PE funds were more focused on exits. The total PE investments in Q4 (as compared to Q3) declined 74% in value terms and 24% in volume terms.

Private Equity investments data and analysis

*Source: The fourth wheel 2012 report by Grant Thornton Consultancy

The above graph clearly indicates the steep decline in the value of Private Equity investment in the 2008 as compared to 2007 due to global crisis. Year 2012 has also seen less PE deals, partly because of the governments unstable tax structures and partly because of lack of exit opportunity due to weak stock market in India. In the year 2012 government has taken a few positive steps in favour of foreign investors.

*Source: The fourth wheel 2012 report by Grant Thornton Consultancy

Although the total value of the PE deals in the year 2012 has fallen but the numbers of the PE deals have increased to 400 from previous years 373.

20052006200720082009201020112012

1000m0.30.10.3

Value not disclosed918.719.41619152024.7

Table 1: Range of PE deals in India Value wise[footnoteRef:2] [2: Sourced from The fourth wheel 2012 report by Grant Thornton]

PE activity in 2012 looks robust despite moderation in the economic growth rate in India. 2012 has witnessed 400 deals compared to 373 deals in 2011. However, the average deal size has reduced in 2012 compared to 2011. Mid-market growth capital deals continued to be the funds of the PE funds.[footnoteRef:3] [3: Data from various sources and newspaper articles]

Sector wise PE deals

Sr. NoSectorUS $ MnVolumeSr. NoSectorUS $ MnVolume

1 Real Estate905515217Shipping & Ports86917

2Banking & Financial Services735326318Electrical & Electronics66625

3Telecom69536119Cement56713

4IT & ITeS688751720Agriculture & Agro Products51537

5Infrastructure Management688711521Retail50543

6Power & Energy517811922Education49370

7Pharma, Healthcare & Biotech322019523Oil & Gas47018

8Publishing251311924Steel35911

9Automotive22145825Plastic & Chemicals34025

10Manufacturing11748126Aviation31923

11Textile & Apparels15627127Travel & Tourism20813

12Hospatality12906328Mining1845

13Others11219229Metals & Ores838

14FMCG, Food & Beverages10945730Packaging594

15Logistics8934731Printing & Stationery507

16Engineering8704032Breweries & Distillery272

33Gems & Jewellery252

Below is the data regarding the Private Equity deals in various sectors from 2005 to 2012.

*Source: The fourth wheel 2012 report by Grant Thornton ConsultancyAccording to Mr. Raja Kumar, Founder & CEO of Ascent Capital Advisors, PE funds in general have started to focus on sectors which are relatively insulated from the volatile macro- environment such as healthcare, education and technology.[footnoteRef:4] [4: As per interview of Mr. Raja Kumar by Grant Thornton Research]

Figure showing Sector wise PE deals volume wise

Large PE deals during 2005-2007[footnoteRef:5] [5: Source: PwC Money tree India Q42012 Report]

YearInvestorInvesteeSector%US $ mn

2007Temasek holdingsBharti AirtelTelecom51907

2006Kohlberg Kravis Roberts & CoFlextronics SoftwareIT & ITes851035

2012[footnoteRef:6] [6: Largest deal in 2012: Bain Capital Genpact Ltd. Deal was a secondary deal paving way for the exit for existing investors]

Bain CapitalGenpact Ltd.IT & ITeS301000

2007Temasek Holdings, Investment Corp of Dubai, GS, IEP, Macquarie, AIF Capital, CitigroupBharti InfratelTelecom101000

2011Bain Capital, GICHero InvestmentAutomotive30848

2007ICICI Venture FundsJaypee InfratechReal EstateN.A800

2007George Soros, Eton Park Capital, Deutsche Asset Mgmt., Capital International, Citigroup, T Rowe Price, Credit Agricole, UBS & Kotak MahindraGMR InfrastructureInfrastructure ManagementN.A767

2008Carlyle groupHDFCBanking & Financial Services6650

2007Avenue CapitalSKIL InfrastructureInfrastructure Management26500

Number of Private Equity Investors in India

Top Private Equity firms in IndiaICICI VentureChrys CapitalSequoia CapitalIndia Value FundKotak Private Equity GroupBaring Private Equity PartnersAscent CapitalEverstone CapitalBlackstone Group

Some of the details regarding these top companies in the private equity sector in India are given below:ICICI Venture:ICICI Venture Fund Management is headquartered in the city of Mumbai and this company has raised funds to about three billion US dollars in the last decade. This company is a subsidiary of the popular ICICI Bank.Chrys Capital:Chrys Capital came into existence in the year 1999 and it is a company based in the city of New Delhi. The company has made nearly 50 investments right from its inception and has raised nearly 2 billion US dollars in private equity funds.Sequoia Capital:The former name of Sequoia Capital is West Bridge Capital Partners and their main investment areas include financial services, energy and consumer goods industry. The company is operating from the city of Bangalore and they are focused on investment in any industry at a very early growth state of the industry.India Value Fund:This company came into existence in the year 1999 and they are operating from the city of Mumbai in the state of Maharashtra. The former name of this company is GW Capital and it boasts nearly 1.4 billion US dollars, which is divided among four funds.Kotak Private Equity Group:This company came into existence in the year 1997 and they have made huge investment in the health care and infrastructure industry in India since these are one among the fastest growing industries in the nation.Baring Private Equity Partners:This company is shortly called as BPEP and it came into existence in the year 1998. They have invested huge money in the Indian, Latin and American markets and their investment mainly focuses on sectors like information technology, pharmaceutics and manufacturing industry.Ascent Capital:Ascent Capital is one of the leading private equity firms in India and with more than a decade of their existence, they have built unmatched record of success in offering growth capital to develop market leader in India. They have made more than 40 entrepreneurs achieve their dream and they presently manage nearly 600 US Dollars in three funds.Everstone Capital:The first fund of this company was raised in the year 2006 for an amount of 425 million US dollars. They focus on investment in clothing industry andengineeringfirms. This company is a subsidiary of the popular Future Holdings company.Blackstone Group:Blackstone Group is actually based on the United States and they have made their announcement in the Indian Infrastructure Industry to a tune of US 1.5 billion dollars.These, top players have large funds and are active in the market.[footnoteRef:7] [7: http://entrance-exam.net/top-private-equity-firms-in-india/ accessed on 15 may 2013]

Most active PE firms in 2012

InvestorsCityNo. of deals*InvestorsCityNo. of deals*

Blume VenturesMumbai5Evolvence India Life Sciences FundHyderabad2

Indus BalajiMumbai5Inventus Capital PartnersBangalore2

StanChart PEMumbai3Kae CapitalMumbai2

EverstoneMumbai3L Capital AsiaMumbai2

Helion VenturesBangalore3Lightspeed VenturesDelhi2

Matrix Partners IndiaMumbai3Multiples PEMumbai2

Nexus VenturesMumbai3Omidyar NetworkMumbai2

Sequoia Capital IndiaBangalore3Peepul CapitalChennai2

Unilazer VenturesMumbai3Qualcomm VenturesBangalore2

Aditya Birla PEMumbai2SAIFGurgaon2

Angel PrimeBangalore2Samara CapitalMumbai2

Canbank VenturesBangalore2VerlinvestNA2

CX PartnersDelhi2