Private equity firms invested about USD526m across 36 deals in India during the quarter ended March 2009, according to a study by Venture Intelligence, a research service focused on pri
Private equity firms invested about USD526m across 36 deals in India during the quarter ended March 2009, according to a study by Venture Intelligence, a research service focused on private equity and M&A transaction activity in India.
The amount invested during the quarter was dramatically lower than that during the same period last year, which witnessed 133 deals totalling USD3.9bn, and also lower compared to the immediate previous quarter (USD1.2bn across 63 deals).
Among the largest investments during the quarter was the USD50m raised by media and entertainment firm Nimbus Communications from its existing investors and the USD47.5m raised by start-up broadband ISP services provider Tikona Digital Networks.
The IT and IT-enabled services industry registered 13 deals worth USD95mn during Q1 2009, followed by manufacturing (with four deals worth USD36m) and BFSI (three deals worth USD53m), the Venture Intelligence study indicates.
The data indicates that the venture capital segment also witnessed a sharp deceleration in activity Q1 2009 with VC firms investing USD44m over just nine deals during the period. The amount invested during the period was lower compared to the immediate previous quarter, which had witnessed USD91m being invested across 18 deals, as well the same quarter in 2008 (USD226m invested across 33 deals).
The largest investment reported during Q1 2009 was the USD12m raised by US- and India-based chip design firm Si2 Microsystems from Ventureast and Jafco Asia. IT and ITES companies accounted for five out of the nine investments during Q1 2009. Two-thirds of the VC investments during Q1 2009 were in the early stage segment.
‘While investment activity is down across the board, there seems to be an interesting short-term trend – on a relative basis – in terms of stage of investments. There are more deal closures at the two ends of the spectrum – late stage and early stage. In the current environment, growth stage companies seem to be postponing their fund raising plans due to both business uncertainty and valuation concerns,’ says Arun Natarajan, chief executive of Venture Intelligence (pictured).
‘The silver lining during the period was that, regardless of the environment, PE/VC investors will manage to find the money to invest in companies that are founded by executives with deep domain expertise – exemplified by companies like broadband ISP firm Tikona Digital Networks and vocational education firm Global Talent Track.’
