PE Activity in India - 2010

ARC
Strategies for your Success
Indian Private Equity Market
Markets see revival…

Private Equity Deals back with a bang…
The Year 2010
ARC
© ARC Financial Services (P) Ltd. All rights reserved. Privileged and confidential information of ARC Financial Services www.arc-fs.com | 1
What is Private Equity… ARC
 Raising equity for companies from Private Equity (PE) players is one of the most important
aspects of the investment banking services. PE funds concentrate their investments normally in
unlisted companies that cannot or do not want to raise equity in public market (via IPO route).
 There are many a reasons why a company looks for private equity investment, but the two key
reasons could be -
 The company has grown by itself so much that it requires a fresh injection of funds from
outside (i.e. other than promoters) to grow further and reach higher economies of scale
 The management has plans to go public at some later stage (say after 5-7 years).
Bringing the PE investment is considered one of the ways for companies to go public.
 People normally take private equity and venture capital as one and same thing. Though
identical, the two industries are quite different.
 Venture capital involves minority investments in firms at early stages of development

(seed, start-up and development capital), whereas private-equity funds make majority
investments in mature companies.
BSE Sensex: The Decade 2001 – 2010 ARC
 BSE Sensex outperformed the world indices in the first decade; Sensex jumped by a whopping 416% compared to Hang Seng
(53%), SSE Composite (35.4%), Dow Jones (7.3%), NASDAQ (7.4%), S&P (-4.7%), FTSE (-5.2%) and Nikkei (-25.8%)
 BSE Sensex ended the 1st decade of 21st century at 20,509 with a gain of 416% or 3,044 points on its closing of 31 Dec’00.
 Just two years (2001 and 2008) witness the fall in Sensex on Y-o-Y basis when it
lost 17.87% and 52.45% respectively. The fall of 2008 was the worst in the
decade driven by global recession, which lead to financial turbulence through out 31 Dec’10
the world. 20,509
 The biggest yearly gain came in 2009 when Sensex recovered 7,817 points or
81.03% over closing of 9,647 at the end of 2008.
 The total market capitalisation of BSE topped the decade (2000-2010) at INR
72.96 trillion, up 953% compared with INR 6.93 trillion in 2000. Indian companies
added m-cap of INR 66 trillion during last ten years, with the newly listed
companies contributing almost 40% of the addition.
 Global funds bought a net of $90.17 billion since 2001, taking net flows into
equities to $101.97 billion, according to data on the SEBI website
Global
Recession
era in 2008
1 Jan’01
BSE Sensex
3,955
BSE Sensex 31 December 2000 3,972
Closing High (05 Nov’10) 21,005 31 December 2010 20,509
Closing Low (21 Sep’01) 2,600 Change (%) 416%
Jan’01 Jan’03 Jan’05 Jan’08 Dec’10
Financial Markets: The Year 2010 ARC
 2010 was a fabulous year for the Indian markets; bulls completely charged up Gold (INR per 10gm)
in 2010 and pushed the benchmark indices near all-time highs, led by huge
inflow of foreign money. India’s growth story attracted big foreign money flow in
the year despite scams like telecom, bribe-for-loans and commonwealth 16,690
games.
23.3% 20,585
 The benchmark indices rose for a 2nd consecutive year, making the benchmark
index the best performer among the world's best indices as economic growth
lured record foreign funds. The BSE benchmark index Sensex rallied 17% in
last year, extended previous year's biggest rally in 18 years. Dec’09
Dec’10
• The 30-share BSE Sensex closed at 20,509, up 3,044 points or 17.43%
 2010 was also the best year for Indian primary market; 65 Indian companies Crude Oil ($ per barrel)
raised more than INR 710 billion through public offers (both IPOs and FPOs).
• Coal India, NTPC, NMDC, Power Grid and Shipping Corporation were
the largest public offers in 2010, which collected more than 50% of total
money. 92.25 17.8%
78.32
 FIIs were net buyers to the tune of $29 billion in Indian equities – highest ever
in history while mutual funds were net sellers of $6 billion – highest ever
outflows in history.
16.91% 17.43% BSE Sensex in 2010 31 Dec’10

11.02% 12.78%
20,509
9.00%
5.32%
-14.31% -3.01%
4 Jan’10
17,559
Closing High (05 Nov’10) 21,005
SSE Nikkei Hang sang FTSE Dow Jones S&P NASDAQ BSE Closing Low (05 Feb’10) 15,791
Composite
PE Deals Back with Bang… Followed the Sensex Path ARC
 Private equity investment in India rebounded in 2010 after a lull due to global financial meltdown with
energy sector being the biggest draw. This revival has seen deal value doubling in 2010 as opposed to
2009 when it slipped to its lowest levels.
 In calendar year 2010, private equity and venture capital firms invested USD 8.62 billion in 406 deals as
against USD 4.4 billion in 287 deals during the previous year. This represents a 96% increase in deal
value and a 41% increase in deal volumes.
 However, the deal value is still way behind compared to 502 deals with a total disclosed value of USD
11.98 billion in 2008 and 488 deals with an announced value of USD 15.61 billion in 2007 when deal-
making peaked.
No. of PE & VC Deals in India Money Raised via PE & VC deals in India (USD Billion)
488 502
15.61
406
11.98
287
8.62
4.4
2007 2008 2009 2010 2007 2008 2009 2010
(Note: Analysis here in this document includes only announced deal values. If the deal value is not known, that will not reflect.
Top Five Most Active Private Equity Firms In 2010 ARC
 Year 2010 saw revival in private equity investments in India after two years of slowdown as the
story of growth in the country was a rare combination of believable and sustainable at the same
time.
 It also witnessed top bracket global PE firms take the front bench as the biggest dealmakers by
value even pushing down the most prolific investors such as International Finance
Corporation, the private lending arm of the World Bank, and Sequoia down the ranks.
 So much so that none of the top five PE investors of 2009 managed to maintain their position this year
VC Firm No. of Deals Announced Deal

Value (USD Million)
Macquarie-SBI Infrastructure Fund 3 531
Temasek Holdings Advisors 5 462
Blackstone Advisors 4 431
Olympus Capital Holdings Asia 2 308
Kohlberg Kravis Roberts & Co (KKR) 3 289
Venture Capital Deals Too See Pickup ARC
 While the private equity deal volumes certainly increased this year, there was also a pick up in
venture capital deals.
 Out of the total USD 8.62 billion invested in 2010, USD 7.55 billion was accounted for by deals by
PE firms and around USD 481 million by venture capital investments. The rest constitutes angel
investments and other PE type deals.
 The VC funding shows an increase of 55% over 2009. VC investments in India halved in 2009
when value fell from USD 660 million in 2008 to USD 310 million in 2009. The year also several
firms doing their growth capital rounds as valuations stabilised.
Break up Money Rasied 2010 (USD Million) Money Raised via VC deals in India (USD Million)
660
7550
481
310
481
589
2008 2009 2010

PE Deals VC Funding Angel Investments
Top Five Most Active Venture Capital Firms In 2010 ARC
 Venture capital transactions (early stage transactions as opposed to late stage or growth private
equity) revived in line with the improved investment climate in the country.
 Although VC firms continued to be risk averse with not a single venture capitalist matching USD
50million investment that the top two VC firms brought in the previous year, they struck more
deals and a number of firms invested USD 20-25 million each.
 Helion Advisors managed to be the only VC firm to retain a place in the top VC firms for the
second successive year.
VC Firm No. of Deals Announced Deal

Value (USD Million)
Sequoia Capital India 7 41
Tata Capital Private Equity 3 29.5
Helion Advisors Pvt. Ltd. 8 26.4
Canaan Advisors Pvt. Ltd. 4 25
International Finance Corp 5 24.4
Comeback of Blockbusters ARC
No. of Deals Above USD 100 million in Size

 2010 also saw mega-deals coming back as
capital-intensive infrastructure plays continued
to be favourite among PE firms. 25
 There were 20 deals over USD 100 million in 20

2010 as compared to 9 deals in the similar
range in 2009.
9
 But these still have to match the highs of
2008 when there were 25 deals over
USD 100 million.
2008 2009 2010
There were a total 41 deals over a size

USD 50 million in 2010, aggregating to a
significant majority of deal making in
terms of value at USD 4.9 billion.
2010 Hottest Sectors ARC
 2010 literally saw power-packed dealmaking in terms of deal values, with 20% or deals worth $1.72
billion in the power utility sector.
 The segment also saw the largest PE deal of year when a consortium led by Morgan Stanley
Infrastructure Partners invested $425 million in Asian Genco
 As PE firms continued to chase the domestic consumption theme, consumer discretionary sector
naturally saw frenetic activity with 73 deals worth USD 1.21 billion.
 These included investments speciality retail outfits in areas like kidsweear (Lilliput), coffee
chains (Coffe Day Holdings), salons (Enrich), among others.
 Real estate sector saw a revival in dealmaking as compared to 2009 but PE firms remained cautious
about investing as the sector still has to show returns.
 It saw 42 deals worth USD 1.31 billion dominated by investments in residential realty.
 Financial services sector also saw deals 54 deals worth USD 972 million in areas like
microfinance, credit rating, commodity and energy exchanges, insurance firms and housing finance
companies.
Sector Wise Breakup of Deals ARC
Sectors that kept dealmakers busy were consumer discretionary, financial services, real estate and healthcare.
Number of Deals Value Raised (USD Million)
1210
73
972
54 2409
127
42
1310
328
34
1720
190 481
23 34
19
Consumer Discretionary Financial Real Estate Consumer Discretionary Financial Real Estate
Energy Healthcare Education Energy Healthcare Education
Consumer Staples Others Consumer Staples Others
ARC
For More Information Contact:
CA. Tapan Jindal

tapan@arc-fs.com
+91 11 4562 2128
ARC
Copyright © by ARC Financial Services Private Limited
No part of this publication may be reproduced, stored in a retrieval

system, or transmitted in any form or by any means —
electronic, mechanical, photocopying, recording, or otherwise —
without the permission of ARC Financial Services Private Limited.

PE Activity in India - 2010

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PE Activity in India - 2010

Uploaded by

Copyright:

Available Formats

ARC

Strategies for your Success

Indian Private Equity Market

Markets see revival…

 Venture capital involves minority investments in firms at early stages of development

Closing High (05 Nov’10) 21,005 31 December 2010 20,509

Closing Low (21 Sep’01) 2,600 Change (%) 416%

Jan’01 Jan’03 Jan’05 Jan’08 Dec’10

16.91% 17.43% BSE Sensex in 2010 31 Dec’10

Closing High (05 Nov’10) 21,005

2007 2008 2009 2010 2007 2008 2009 2010

VC Firm No. of Deals Announced Deal

Temasek Holdings Advisors 5 462

Blackstone Advisors 4 431

Olympus Capital Holdings Asia 2 308

Kohlberg Kravis Roberts & Co (KKR) 3 289

2008 2009 2010

VC Firm No. of Deals Announced Deal

Tata Capital Private Equity 3 29.5

Helion Advisors Pvt. Ltd. 8 26.4

Canaan Advisors Pvt. Ltd. 4 25

International Finance Corp 5 24.4

No. of Deals Above USD 100 million in Size

 There were 20 deals over USD 100 million in 20

There were a total 41 deals over a size

Number of Deals Value Raised (USD Million)

CA. Tapan Jindal

Copyright © by ARC Financial Services Private Limited

No part of this publication may be reproduced, stored in a retrieval

You might also like