Private equity (PE) investments in India has fallen to its lowest levels since 2009 at $7.5 billion over 384 deals during 2013, against $9.2 billion investment made across 484 deals in 2012, according to data from investment research firm Venture Intelligence. The 18 investments of over $100 million during 2013 accounted for as much as 47% of the value pie during the year.
Even as overall investments declined, with 154 investments worth about $2.3 billion, IT and ITeS companies topped in terms of both investment value and volume during last year. According to Venture Intelligence, the year also saw PE firms willing to put serious bets on Indian IT products companies with Silver Lake Partners leading a $40 million round in commodities trading software firm Eka Software for the US-based PE firm’s inaugural investment in India.
The e-commerce sector also saw more than $500 million being invested with companies such as Flipkart and Snapdeal receiving big boost to their expansion strategy. Three deals from the IT sector found a place among the top five investments with the $443-million buyout of Hexaware Technologies by Baring Asia being the second-biggest PE investment of the year. The other two being the $420-million buyout of GlobalLogic by Apax Partners and the $270-million buyout of CSS Group by Partners Group.
The year also saw PE firms acquiring minority stake in IT firms rather than controlling stake that is usually the case.
For instance, Peepul Capital acquired a minority stake in online advertising firm Komli Media, while Sequoia Capital India invested $37 million in online restaurants reviews service Zomato Media by joining hands with the company’s strategic investor and majority owner, online classifieds firm Info Edge.
PE firm KKR’s $460-million investment in Alliance Tire Group was the biggest deal of the year. All the four largest deals of the year involved global PE investors buying majority stakes from existing investors.
While buyout deals accounted for less than 5% of the PE investments in volume, it accounted for as much as 27% of the value. Acquisition of minority stakes in listed companies accounted for 14% in volume terms and 10% in value terms.
The healthcare and life sciences industry was the second-largest destination for PE investments in 2013 attracting $1.2 billion across 57 transactions.
Again, the top-three transactions involved secondary purchases from existing investors — the $200-million investment in Gland Pharma (by KKR); the $161-million investment in Naresh Trehan-promoted hospital Medicity (by Carlyle) and the $113-million investment in Emcure Pharmaceuticals (by PE firm Bain Capital).
Manufacturing companies attracted about $1.1 billion from PE investors across 30 transactions. Baring Asia’s R1,400-crore (about $233-million) investment in Lafarge India, the Indian subsidiary of French cement giant Lafarge, was the second-largest transaction. The financial sector received the fourth-largest investments in attracting $727 million across 44 transactions.
Companies based in southern and western regions accounted for 36% of the PE investments each (in value terms) during 2013. While the amount (about $2.7 billion) was spread across 148 investments in south India-based companies, it got spread across 127 transactions among west India-based companies. Companies in north India attracted investments worth $1.8 billion (24% of the value pie) across 84 deals, the report said.