Indian Private Equity Report 2009
1. Executive Summary
PE investment plummets for the second successive year
Most Indian Private Equity (PE) stalwarts spent the Year 2009 ‘waiting out’ the downturn on the sidelines. The slide in investments that began in 2008, showed no signs of abating. In fact, it got steeper with PE investments in CY2009 tumbling 62% to $4.3bn (250 deals), from $11.2bn (344 deals) in CY2008, a more severe drop than the 42% Year-on-Year (YoY) fall seen in CY2008.
This was not because the Indian economy was going through the worst of times. Far from it, the resilient economic growth, increasing inflows through Foreign Direct Investments (FDIs) & Foreign Institutional Investors (FIIs), a surge in the markets in the post-election period and, towards the end of the year, improving numbers bringing a muchneeded dose of optimism back into corporate boardrooms - there was much to cheer about in India during 2009. Yet, with the global markets still too far from recovering, there was little steam to turn the wheels of the private equity (PE) industry.
Crisis-battered Limited Partners (LPs) continued to breathe down the necks of PE players, their cautious approach creating a difficult climate for fund raising and stricter due diligence killing many a deal before being inked. All those looking forward to pick up bargain deals at the start of the year were shown the red light by Indian promoters, unwilling to play ball at lower valuations. Also, once the market took off post-March, valuations became an even bigger concern. Further, strong stock market performance gave rise to alternate means of funding, with QIPs becoming the flavour of the season.
With the going being far from smooth, the PE players in India spent 2009 doing what they were supposed to do -- bolstering their strong-performing companies, working hard on the not-so-well performing ones, jumping on any exit opportunities that came up and, very selectively, investing. And now as we push into 2010, though the deal flow is expected to pick up, it is very clear, it will be a long wait before India reaches the euphoric $19.2bn levels of PE investing seen in India in 2007.
PE investment plummets for the second successive year
Most Indian Private Equity (PE) stalwarts spent the Year 2009 ‘waiting out’ the downturn on the sidelines. The slide in investments that began in 2008, showed no signs of abating. In fact, it got steeper with PE investments in CY2009 tumbling 62% to $4.3bn (250 deals), from $11.2bn (344 deals) in CY2008, a more severe drop than the 42% Year-on-Year (YoY) fall seen in CY2008.
This was not because the Indian economy was going through the worst of times. Far from it, the resilient economic growth, increasing inflows through Foreign Direct Investments (FDIs) & Foreign Institutional Investors (FIIs), a surge in the markets in the post-election period and, towards the end of the year, improving numbers bringing a muchneeded dose of optimism back into corporate boardrooms - there was much to cheer about in India during 2009. Yet, with the global markets still too far from recovering, there was little steam to turn the wheels of the private equity (PE) industry.
Crisis-battered Limited Partners (LPs) continued to breathe down the necks of PE players, their cautious approach creating a difficult climate for fund raising and stricter due diligence killing many a deal before being inked. All those looking forward to pick up bargain deals at the start of the year were shown the red light by Indian promoters, unwilling to play ball at lower valuations. Also, once the market took off post-March, valuations became an even bigger concern. Further, strong stock market performance gave rise to alternate means of funding, with QIPs becoming the flavour of the season.
With the going being far from smooth, the PE players in India spent 2009 doing what they were supposed to do -- bolstering their strong-performing companies, working hard on the not-so-well performing ones, jumping on any exit opportunities that came up and, very selectively, investing. And now as we push into 2010, though the deal flow is expected to pick up, it is very clear, it will be a long wait before India reaches the euphoric $19.2bn levels of PE investing seen in India in 2007.
1. EXECUTIVE SUMMARY
2. PRIVATE EQUITY TRENDS - A GRAPHICAL SNAPSHOT
3. PE/VC INVESTMENTS IN INDIA DURING 2009 13-63
3.1 Investment Analysis 13-29
3.1.1 PE investments continue free-fall in 2009
3.1.2 Why investments did not take place
3.1.3 A closer look at the year 2009: quarter-wise trend
- QIPs ruled the domestic market with a preference over PE
3.1.4 Top investors turn cautious
3.1.5 New funds made no significant impact either
3.1.6 Impact reflected in the top deals
3.1.7 PE strategies in 2009
3.1.8 Venture Capital Trends
3.2 Investment trend Analysis 30-63
3.2.1 - Sector-wise investments 30-57
– What's in Microfinance that's attracting money?
3.2.2 Stage-wise investments 58-63
4. FUND RAISING ACTIVITY 64-71
4.1 Money behind the money drying up
4.2 Top funds raised during the year
- Why domestic LPs cannot completely replace the foreign capital
4.3 Trends in the fund raising space
5. LIQUIDITY EVENTS 72-75
5.1 Year of opportunistic exits – 2009
5.2 Open market: the preferred route of exit
5.3 DE Shaw tops the exit list
5.4 The year ahead could see a plenty of IPO exits
6. REGULATORY CHANGES PERTAINING TO THE INDIAN PE/VC INDUSTRY DURING 2009
7. UNDERLYING CHALLENGES
8. TRENDS LIKELY TO SHAPE THE INDUSTRY GOING FORWARD
9. INDIA VIS-À-VIS CHINA IN 2009
APPENDIX:
A1 Economic performance during 2009 and what to expect in the year ahead
A2 List of Private Equity investments in 2009: Sector-wise
A3 Profile of top 10 investors in 2009
2. PRIVATE EQUITY TRENDS - A GRAPHICAL SNAPSHOT
3. PE/VC INVESTMENTS IN INDIA DURING 2009 13-63
3.1 Investment Analysis 13-29
3.1.1 PE investments continue free-fall in 2009
3.1.2 Why investments did not take place
3.1.3 A closer look at the year 2009: quarter-wise trend
- QIPs ruled the domestic market with a preference over PE
3.1.4 Top investors turn cautious
3.1.5 New funds made no significant impact either
3.1.6 Impact reflected in the top deals
3.1.7 PE strategies in 2009
3.1.8 Venture Capital Trends
3.2 Investment trend Analysis 30-63
3.2.1 - Sector-wise investments 30-57
– What's in Microfinance that's attracting money?
3.2.2 Stage-wise investments 58-63
4. FUND RAISING ACTIVITY 64-71
4.1 Money behind the money drying up
4.2 Top funds raised during the year
- Why domestic LPs cannot completely replace the foreign capital
4.3 Trends in the fund raising space
5. LIQUIDITY EVENTS 72-75
5.1 Year of opportunistic exits – 2009
5.2 Open market: the preferred route of exit
5.3 DE Shaw tops the exit list
5.4 The year ahead could see a plenty of IPO exits
6. REGULATORY CHANGES PERTAINING TO THE INDIAN PE/VC INDUSTRY DURING 2009
7. UNDERLYING CHALLENGES
8. TRENDS LIKELY TO SHAPE THE INDUSTRY GOING FORWARD
9. INDIA VIS-À-VIS CHINA IN 2009
APPENDIX:
A1 Economic performance during 2009 and what to expect in the year ahead
A2 List of Private Equity investments in 2009: Sector-wise
A3 Profile of top 10 investors in 2009
