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Private equity firms invest USD763m in Indian companies in Q3

Private equity firms invested USD763m in Indian companies across 47 deals during the quarter ended September 2009, according to a study by Venture Intelligence.

The amount invested was significantly lower than that during the same period last year, which witnessed USD2,581m invested across 132 deals, and lower compared to the immediate previous quarter (USD964m across 47 deals).

The latest numbers take the total PE investments in the first nine months of 2009 to USD2,360m across 140 deals, as against the USD9,479m across 365 deals during the corresponding period in 2008.

The largest investment during Q3 2009 was the USD255m investment by KKR to buy out Flextronics’ residual stake in telecom software services firm Aricent. The deal accounted for a third of value of investment during the period.

Led by the KKR-Aricent deal, the IT and ITES industry registered 12 deals worth USD340m during Q2 09, followed by BFSI with eight deals worth USD101m.

Shipping and logistics, healthcare and life sciences, and manufacturing attracted five investments each during the period. Education companies followed next attracting three investments worth USD35m.

“In fact, education and logistics services stand out as among the sectors that continue to witness quarter-on-quarter growth in investor interest,” says Arun Natarajan, chief executive of Venture Intelligence.

Late stage and VC-type investments accounted for 18 and 17 deals respectively each during Q3 09.

The continued rally in the public markets enabled private equity firms to obtain exit routes for their investments in 25 Indian companies during Q2 09, including two via IPOs (Adani Power and Pipavav Shipyard). This compares to seven exits (including three IPOs) in the same period in 2008 and 16 exits (including one IPO) in the immediate previous quarter.

PE firms continued to take advantage of the run up in the stock prices of their listed portfolio companies to book profits. The largest exit via bulk deals on the stock exchanges included ChrysCapital’s sale of USD116m worth of shares of Shriram Transport Finance. Warburg Pincus sold more than a 5.6 per cent stake in insurance and healthcare firm Max India, fetching about USD49m. Other significant exits through the public market route in Q3 09 include India Infoline (for Orient Global), MphasiS (Baring India) and Aurobindo Pharma (StanChart PE).

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