Private Equity News & Analysis

India PE deals drop nearly 70%

Private equity firms in India invested about $1.3bn during the third quarter of 2013, a 67% decline year-on-year, according to Venture Intelligence.

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Private equity investments in India declined 67 percent year-on-year during the third quarter of 2013, to $1.3 billion from $3.9 billion during the same period last year, according to figures from data provider Venture Intelligence. 

Firms have struggled all year making new investments as market uncertainty continues in the country. Over the first nine months of the year, the value of investments made by private equity was down 38 percent, to $5.1 billion compared to $8.1 billion during the same period last year. 

Over the first nine months of the year, the value of investments made by private equity in India was down 38 percent, to $5.1 billion.

Venture Intelligence data

Although this year India held fewer large deals than last, two private equity investments reached over $100 million, with Baring Private Equity Asia’s $260 million investment in Hexaware Technologies being the largest. The firm took a 41.8 percent stake in the business, including a mandatory open offer for an additional 26 percent stake. 

Jean Salata, chief executive and founding partner of Baring, commented on the deal earlier saying, “The total potential investment of over $465 million will be the largest investment made by Baring Asia in India, and is one of the largest ever foreign investments in the IT services sector in India, a sector where India continues to have a strong global competitive advantage.”

IT and ITES was the most popular sector in India during this year overall, with $582 million invested across 25 investments in IT-related businesses, according to Venture Intelligence data. Manufacturing and healthcare followed behind, with $185 million and $140 million invested in those sectors respectively. 

Venture capital deals accounted for 52 percent of the number of investments in India during the third quarter, almost equal to the 54 percent in the corresponding period a year ago. 

Despite disappointing dealflow, some foreign and domestic players are still encouraged by India’s opportunities. In October, UK development finance institution hired Alagappan Murugappan as managing director of its Asia funds team to lead investments in Asia, highlighting its commitment to private equity in India. 

Moreover, despite the woes, domestic players have been raising capital for the country. In September, Motilal Oswal raised $155 million across two India funds, while in May, Tata Opportunities Fund raised $600 million for its debut vehicle, Private Equity International reported earlier. Kedaara Capital is also in the market, having already passed its $500 million target. The firm expects to hold a final close shortly, a source close to the matter told PEI.