India deals and exits plunge

India recorded the lowest Q1 investment value in three years and a decline in exits as IPO markets remain weak.

India’s private equity investments and exits fell significantly during the first quarter of 2013, according to a MoneyTree report from PriceWaterhouseCoopers.

Deal value fell to $929 million, down 56 percent compared to the same quarter last year. The number of deals completed was 66, representing a decline of 44 percent year-on-year.

“This is the first time in the last three years that investments in the first quarter went below the billion [dollar] mark,” the report said.

[PE] exit value dropped 18 percent year-on-year to $1.02 billion. Compared to the previous quarter, exit value plummeted 40 percent

PWC's MoneyTree Report for Q1

The figures were also down from the previous quarter. Sanjeev Krishan, executive director & leader of transaction services at PWC in India, said he was surprised at the fall in investments. “You have to accept the fact that the PE market is in a bit of consolidation at the moment. There aren’t as many funds as there were in 2008 running after deals.”

The largest Q1 deal was the Government of Singapore Investment Corp’s $151 million investment in energy company Greenko Group in March.

Exits also declined. Exit value dropped 18 percent year-on-year to $1.02 billion. Compared to the previous quarter, exit value plummeted 40 percent. 

In number as well, exits fell to 24 compared to 34 during the same period in 2012.

Warburg Pincus, however, reported two exits in Q1, IT company WNS Global Services ($192 million) and energy business Havells India ($84 million), the report said.

About $815 million in exit value was realised through (non-IPO) public market sales from nine deals. Strategic sales represented $106 million in divestments through seven deals.

“There are no signs of life [in the IPO market] yet,” Krishan said. “We’ll still wait and watch before it becomes an ideal exit point for PE.”

However, he expects both deals and exits to increase in the second quarter, pointing out that several announced transactions are taking time to complete.

For example, in May, Baring Private Equity Asia invested $256 million in cement producer Lafarge India and TPG Capital sold a 10 percent stake in Shriram Transport Finance, reportedly for $304 million.

“We definitely expect second quarter improvement. Generally deals in India are taking longer to consummate as the PE guys get a little more cautious about where they put their money.” 

The report also noted that some investors have shifted attention to Southeast Asia, mainly Indonesia, Thailand and the Philippines. “However, this may also be a time when tenacious investors can find some of the best deals in India,” the report said.