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July 08, 2012

Slowdown in PE continues; quarterly investment dips 34% to below $1.9-B

Private Equity firms invested about $1,848 million across 102 deals during the quarter ended June 2012, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity and M&A transaction activity in India. The investment amount was 34% less than that invested in the same period last year ($2,798 million across 126 transactions) and also 10% less than that during the immediate previous quarter (which had witnessed $2,050 million being invested across 103 transactions). (Note: The above figures do not include PE investments in Real Estate.)

There were only four PE investments worth over $100 million (with one above $200 million) during Q2’12 compared to 10 such transactions in the same period last year (and six during the immediate previous quarter), the Venture Intelligence analysis showed.

The largest PE investment during Q2’12 was Morgan Stanley Infrastructure Partners’ investment of Rs.1,200 crore for a 51% stake in Continuum Wind Energy, a Singapore-headquartered developer of wind assets in India. The second largest investment during the period was Fairbridge Capital, a subsidiary of Canada-based listed Fairfax Financial Holdings, acquiring a 77% stake in publicly listed travel services firm Thomas Cook (India) for Rs. 817.4 crore. Warburg Pincus’ acquisition of a 53.67% stake in publicly listed consumer finance company Future Capital Holdings for Rs. 563 crore was the third largest.

IT & ITES companies attracted $379 million (21% of the value pie) across 42 reported investments during Q2’12, snatching the lead from Healthcare & Life Sciences industry (that topped the immediate previous quarter) as the favorite sector for PE investments during Q2’12. Powered by five renewable power project deals (that attracted about $299 million between them), the Energy industry claimed the second spot. HLS companies came in third attracting $243 million across 12 investments. It was followed by BFSI firms with $232 million across 10 investments.

The IT & ITES investments were dominated by follow-on rounds at various VC-backed Online Services companies – including local listings firm JustDial ($60-M from existing investors Sequoia Capital and SAP Ventures); advertising focused Pubmatic ($45-M led by new investor August Capital) and classifieds focused Quikr ($32 million round led by new investor, Warburg Pincus).

In Energy, the $211 million Continuum deal, was followed by IFC’s investment of $40 million in equity (apart from $90 million in debt) in wind energy firm Inox Renewables. The third largest investment in the sector was AMP Capital’s $29 million investment in Shalivahana Green Energy which operates a portfolio of power generation assets across the agri-waste, hydro and wind sectors.

VC type deals (in volume terms) accounted for 54% of the investments during Q2’12 compared to 44% in the corresponding period a year ago. The share of Late Stage deals, at 23% of the PE investments during Q2’12, was slightly lower than compared to the same period a year ago (at 25%). The share of listed company investments was flat at 9%.


Real Estate

Private Equity-Real Estate firms made 7 investments (amounting to US$162 million across 6 deals with disclosed values) during the quarter ended June 2012, according to the data from Venture Intelligence. The volume of investments was less than half the 18 investments in the same period in the previous year (which witnessed $553 million being invested across 14 transactions with disclosed values) and also the 17 investments ($573 million across 15 deals) during the Jan-Mar 2012 quarter.

Morgan Stanley Real Estate Investment's Rs.500 crore commitment to Supertech's township project in Noida, Cape Town, was the largest during the latest quarter. Supertech also attracted a Rs.100 crore commitment from US-based Walton Street Capital towards the residential towers that will come up at its mixed-use project Supernova at Noida. Government of Singapore Investment Corporation (GIC) invested Rs.100 crore to enable listed real estate developer Brigade Group to buy land in Bangalore's Whitefield to develop a premium residential project.

About Venture Intelligence


Venture Intelligence, a division of TSJ Media Pvt. Ltd., is the leading source of information on private equity and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in