The Private Equity (PE) deal activity in India which was subdued in 2008 and 2009 due to global downturn, has bounced back
with a record `average deal-a-ay' in 2010, according to VCCEdge.com. The
total values of PE deals are valued over $500 mn during each month for the
period January-April 2010. In April alone, the total deal value rose by 168%
amounting to $762.55 mn, the highest for the month in the last four years.
According to Mukesh Jain of Equirius Capital, "With global liquidity concerns
easing, the investment environment has improved significantly, and India is
expected to be one of the biggest beneficiaries of the renewed investment
interest." He added, "The high GDP
growth rate in the last 5-7 years also had a significant role in cementing that
belief. The way India performed in the period when most of the economies were
struggling in the aftermath of the 2008 collapse further strengthened
investors' confidence." Analysts believe with
more and more companies eyeing investment opportunities in India, the venture
capitalists have started dabbling in the private equity space with bigger deals
to grab a larger share of the pie in India. "VC, PE lines are blurring," says
Sumir Chada, MD, Sequoia.
The deal basket by PEs which once comprised of only a handful of sectors like
IT & ITeS and manufacturing has also been expanded to include sectors
like Consumers, Discretionary, Healthcare and Financial Services, Industrials
and Utilities. "Venture Capital Funds continue to seek and invest in
technology areas, while PE Funds' appetite ranges from business serving domestic
consumers, infrastructure companies and players building out social
infrastructure," notes Jain. The report from VCCEdge.com states that there
were about 114 VC exits during the period 2004-2009, of which 62 were
M&A deals, 15 IPOs, and 36 secondary sale/buybacks. The year 2007 witnessed
the highest number of VC exits with an average multiple of 5.9X; while there
was lowest number of exits in 2008, it clocked the highest return multiple
of 21X. The year gone by registered around 13 exits with an average return
multiple of 2.8X.
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