Indian Private Equity Report 2010
Executive Summary
Year 2010 saw Private Equity (PE) investments in India turn the corner, recovering to reach $8.13 bn across 328 disclosed transactions from the low of $4.25 bn across 250 deals made in 2009 - a healthy rise of ~90%. In fact, the past five years have seen a wild roller coaster ride for PE investments in India - with the good times being in 2007 when investments crossed a huge $19 bn, only to see an equally sharp and heart-wrenching fall in 2009.
The year started on a positive note with the stock markets continuing the rise begun postelections in 2009, coupled with revived optimism in corporate boardrooms. As the year progressed, growth rebounded on all fronts. Faster economic growth, with Gross Domestic Product (GDP) growth of over 8.5% for the last 2 quarters, bought India back on the radar of global investors. Foreign Institutional Investors (FIIs) invested a record $28.9 bn in domestic equities till November 2010, making it the only Asian market to have received more than $20 bn of investment this year. As investors betted big on Indian stocks markets surged - Nifty & Sensex crossed the landmark 6,000 and 20,000 levels, respectively, in September in 2010, last seen 32 months ago in January 2008.
With ideal conditions of strong economic growth, improved valuations and revived optimism, PE investors were back on the deal table. Moreover, after two successive years of low deal action,there was pent up pressure to perform and put money already in the system (dry powder) from Limited Partners (LPs) to work. In fact, LPs continued to hold back the purse strings and, in many cases began pushing for meaningful returns before committing more capital. As a result exits surged to a new high at $5.3 bn.
Thus, PE players in India spent 2010 doing what they were supposed to do - putting money to work and showing meaningful returns to LPs before they could bargain for fresh funds. As we enter 2011, with strong GDP growth resuming, stable economic fundamentals asserting themselves and PE deal activity on the upswing, the upheaval of 2009 is fading as a distant memory. We will see that as India’s economy continues its sustained growth, PE activity should increase gradually from today’s baseline situation. However, it will be a long wait before India reaches the euphoric $19.2 bn levels of PE investing seen in India in 2007.
Year 2010 saw Private Equity (PE) investments in India turn the corner, recovering to reach $8.13 bn across 328 disclosed transactions from the low of $4.25 bn across 250 deals made in 2009 - a healthy rise of ~90%. In fact, the past five years have seen a wild roller coaster ride for PE investments in India - with the good times being in 2007 when investments crossed a huge $19 bn, only to see an equally sharp and heart-wrenching fall in 2009.
The year started on a positive note with the stock markets continuing the rise begun postelections in 2009, coupled with revived optimism in corporate boardrooms. As the year progressed, growth rebounded on all fronts. Faster economic growth, with Gross Domestic Product (GDP) growth of over 8.5% for the last 2 quarters, bought India back on the radar of global investors. Foreign Institutional Investors (FIIs) invested a record $28.9 bn in domestic equities till November 2010, making it the only Asian market to have received more than $20 bn of investment this year. As investors betted big on Indian stocks markets surged - Nifty & Sensex crossed the landmark 6,000 and 20,000 levels, respectively, in September in 2010, last seen 32 months ago in January 2008.
With ideal conditions of strong economic growth, improved valuations and revived optimism, PE investors were back on the deal table. Moreover, after two successive years of low deal action,there was pent up pressure to perform and put money already in the system (dry powder) from Limited Partners (LPs) to work. In fact, LPs continued to hold back the purse strings and, in many cases began pushing for meaningful returns before committing more capital. As a result exits surged to a new high at $5.3 bn.
Thus, PE players in India spent 2010 doing what they were supposed to do - putting money to work and showing meaningful returns to LPs before they could bargain for fresh funds. As we enter 2011, with strong GDP growth resuming, stable economic fundamentals asserting themselves and PE deal activity on the upswing, the upheaval of 2009 is fading as a distant memory. We will see that as India’s economy continues its sustained growth, PE activity should increase gradually from today’s baseline situation. However, it will be a long wait before India reaches the euphoric $19.2 bn 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 2010
3.1 Investment Analysis
3.1.1 Private equity sees strong rebound in deal making
3.1.2 Factors that drove PE investments in 2010
3.1.3 Private equity “Turning the Corner” in India
3.1.4 A closer look at the year 2010: month-wise data
3.1.5 Tough competition from other sources of funding
3.1.6 Big boys make a smart comeback
3.1.7 New funds did a lot better
3.1.9 Top 10 deals aggregated over 30%
3.1.9 PE Strategies in 2010
3.2 Trend Analysis
3.2.1 Sector-wise Investments
3.2.2 Stage-wise Investments
4. FUND RAISING
4.1 Fund-raising, still beset with challenges
4.2 Funds taking longer to close
4.3 No fund exceeding $500 mn in size
4.4 Top funds raised during the year
4.5 Trends in the fund-raising space
5. LIQUIDITY EVENTS
5.1 Record exits signal maturing of PE business
5.2 Few deals wherein high values matched high returns
5.3 Buybacks emerged as the highest grosser
5.4 Fall in valuations and forced exits result in loss for some players
6. REGULATORY CHANGES PERTAINING TO THE INDIAN PE/VC INDUSTRY DURING 2010
7. INDIA VIS-A-VIS CHINA IN 2010
8. ISSUES AND CHALLENGES
APPENDIX:
A1 Economic Performance in 2010
A2 Profi les of Top 10 Investors in 2010
A3 List of Private Equity investments in 2009: Sector-wise
2. PRIVATE EQUITY TRENDS - A GRAPHICAL SNAPSHOT
3. PE/VC INVESTMENTS IN INDIA DURING 2010
3.1 Investment Analysis
3.1.1 Private equity sees strong rebound in deal making
3.1.2 Factors that drove PE investments in 2010
3.1.3 Private equity “Turning the Corner” in India
3.1.4 A closer look at the year 2010: month-wise data
3.1.5 Tough competition from other sources of funding
3.1.6 Big boys make a smart comeback
3.1.7 New funds did a lot better
3.1.9 Top 10 deals aggregated over 30%
3.1.9 PE Strategies in 2010
3.2 Trend Analysis
3.2.1 Sector-wise Investments
3.2.2 Stage-wise Investments
4. FUND RAISING
4.1 Fund-raising, still beset with challenges
4.2 Funds taking longer to close
4.3 No fund exceeding $500 mn in size
4.4 Top funds raised during the year
4.5 Trends in the fund-raising space
5. LIQUIDITY EVENTS
5.1 Record exits signal maturing of PE business
5.2 Few deals wherein high values matched high returns
5.3 Buybacks emerged as the highest grosser
5.4 Fall in valuations and forced exits result in loss for some players
6. REGULATORY CHANGES PERTAINING TO THE INDIAN PE/VC INDUSTRY DURING 2010
7. INDIA VIS-A-VIS CHINA IN 2010
8. ISSUES AND CHALLENGES
APPENDIX:
A1 Economic Performance in 2010
A2 Profi les of Top 10 Investors in 2010
A3 List of Private Equity investments in 2009: Sector-wise
