India receives $2bn in PE investments in Q1

Private equity investments in India hit a six-quarter high, with five investments of more than $100m being seen for the first time since Q3 2008.

Private equity firms invested about $2 billion in India in the first three months of 2010, a three-fold increase over the $620 million invested in the corresponding period last year and a 25 percent increase over the amount invested in India in the last quarter of 2009.

The amount invested was the highest witnessed in the last six quarters, according to data from Venture Intelligence, an Indian private equity-focused research service. 

The first quarter of 2010 saw 56 deals as compared to the 58 deals competed in the first three months of 2009, but the average deal size increased significantly to $35.7 million from just $10.7 million in the first quarter of last year.

“The key trend on the private equity investments front during the first quarter was the re-emergence of appetite for large ticket deals,” Arun Natarajan, managing director and chief executive officer of Venture Intelligence, said in a statement. He pointed out that for the first time since the third quarter of 2008 there were five investments of more than $100 million.

The largest Indian deal so far this year is the $425 million investment in power generation firm Asian Genco by a consortium of investors led by Morgan Stanley Infrastructure Partners and including firms such as General Atlantic, Goldman Sachs Investment Management, Norwest Venture Partners and Everstone Capital.

This was followed by a $300 million investment led by a Quadrangle Capital Partners-led consortium in Tower Vision India, a telecom tower management company, and a $220 million investment in Coffee Day Holdings by Kohlberg Kravis Roberts, New Silk Route and Standard Chartered Private Equity. 

In terms of the number of deals, IT and IT-enabled services was the most popular destination for investments, witnessing a total of 13 transactions. Banking and financial services followed next with nine deals. 

The first three months of 2010 saw private equity firms make 32 exits, of which six were made through initial public offerings of shares. Thirteen exits were secured through sales via the public markets, seven through strategic sales, one through a secondary sale and five through buybacks. 

The largest exit in the first three months was the secondary offering by New York-listed business process outsourcing firm Genpact through which General Atlantic, Oak Hill Capital Partners, General Electric and Wells Fargo sold stock worth about $504 million.