Private equity firms invested USD1,392m over 84 deals in India during Q4 2009, taking the annual investment numbers to USD3,824m over 232 deals, according to a study by Venture Intelligence.
The amount invested during 2009 was significantly less than that during the previous year during which PE firms invested USD10,468m across 443 deals.
The amount invested during Q4’09 however was higher than that during the same period in 2008 (which witnessed USD1,215m invested across 72 deals) as well as the immediate previous quarter (USD807m across 53 deals).
“The volatility in the public markets and continued uncertainty around the ability to raise new funds caused investment activity to be muted in 2009,” says Arun Natarajan, founder and chief executive of Venture Intelligence. “With just six investments above USD100m in size in 2009 (compared to 22 such deals in 2008 and 27 in 2007), the year witnessed a clear decline in the appetite for large ticket investments.”
The largest investment reported during 2009 was KKR increasing its stake in telecom software firm Aricent to 79 per cent for a reported USD255m. The Aricent investment was followed by the USD180m investment by existing investors IDFC PE and Oman Investments into independent tower infrastructure firm Quippo Telecom. The third largest deal was Goldman Sachs’ USD115m investment in publicly-listed healthcare firm Max India for a 9.4 per cent stake.
With 56 investments worth about USD617m, information technology and IT-enabled services topped in terms of both value and volume during 2009, the Venture Intelligence study indicates. While BFSI came in next on the volume front with 32 deals, energy was the second highest in value terms at almost USD500m.
Venture capital deals accounted for 37 per cent of the pie in volume terms in 2009. Late stage investments accounted for 28 per cent of the PE deals (in volume terms) and 38 per cent in value terms during 2009. Companies based in South India lead both in terms of total number of investments as well as total value of transactions. Whereas companies from Western India rank second in terms of the number of investments, North-based companies received the second highest investments in term of value.
Among cities, Mumbai based companies retained the top slot with 49 PE investments worth USD850m, closely followed by Bangalore with 42 investments worth USD450m and NCR with 36 investments worth about USD1.08bn. Hyderabad and Chennai attracted 25 and 22 investments each in 2009.
With 11 investments during the year, IFC was the most active PE investor in India during the year. IFC was active across a range of industries – including especially BFSI and energy. Sequoia Capital India with nine investments was the second most active investor during 2009, followed by StanChart PE and Aavishkaar with eight investments each.
Private Equity firms obtained exit routes for their investments in 66 Indian companies during 2009, including seven via IPOs. PE-backed companies raised about USD1.31bn via IPOs during 2009. The USD604m raised by Adani Power via its July IPO was the largest by a PE-backed firm in 2009.
The total value of M&A transactions providing exits to PE-investors during 2009 was around USD1.05bn. These included 38 sales via public markets, 13 strategic sales, four secondary transactions and four buybacks. Firms that exploited the continued rally in the public markets to execute multiple exits via public market sales during the year included ChrysCapital, Citi, IIML, Clearwater and Spinnaker.
The largest M&A deal providing an exit during 2009 was ChrysCapital’s realising of over USD176m during the year via public market sales of the shares of truck finance firm Shriram Transport Finance.
