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Private equity firms invest USD2bn in Indian companies in Q1

Private equity firms invested about USD2bn across 56 deals in India during the quarter ended March 2010, according to a study by Venture Intelligence.

The amount invested during the latest quarter was the highest in the last six quarters.

The figure was significantly higher than that during the same period last year, which witnessed USD620m being invested across 58 deals, and also the immediate previous quarter of USD1,681m across 102 deals.

The largest investment during the quarter was the USD425m investment into power generation firm Asian Genco by General Atlantic, Morgan Stanley, Norwest, Goldman Sachs and Everstone.

Other top investments reported during Q1 2010 included Quadrangle Capital Partners’ USD300m investment into telecom tower infrastructure company TowerVision India; StanChart PE, KKR and New Silk Route’s USD217m investment into Coffee Day Resorts; and TPG Growth’s USD115m investment into clean tech firm Greenko Group.

“The key trend on the PE investments front during Q1 2010 was the re-emergence of appetite for large ticket deals,” says Arun Natarajan, managing director and chief executive of Venture Intelligence. “For the first time since Q3 08, the latest quarter witnessed as may as five investments over USD100m.”

Led by Actis’ USD50m investment into BPO company Integreon Managed Solutions, the IT and ITES industry registered 13 deals worth USD193m during Q1 10, followed by BSFI (nine deals worth USD94m).

Venture capital and late stage investments accounted for 16 and 18 deals respectively during Q1 10.

“Instead of rushing after listed company and pre-IPO deals, investors showed special preference in Q1 10 for slightly younger companies with median sizes of about USD11m,” says Natarajan.

Private equity firms obtained exit routes for their investments in 32 Indian companies during Q1 10, including six via IPOs. This compares to 16 exits (none via IPOs) in the same period in 2009 and 20 exits (including four IPOs) in the immediate previous quarter.

The largest PE-backed IPO during Q1 10 was toll road operator IL&FS Transportation Networks’ USD155m March IPO. Trinity Capital, which had invested USD9.3m in December 2006, sold its entire holding as part of the offering. Other PE investors in ITNL included Goldman Sachs, SCI Asia (Standard Chartered-IL&FS Asian Infrastructure Fund) and Bessemer.

The total value of M&A transactions providing exits to PE-investors during Q1 10 was around USD858m. These included 13 sales via public markets, seven strategic sales, one secondary sale and five buybacks (by either the company or its promoters).

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