Indian exits reach record high in 2010

Private equity firms exited a record 121 companies in India during 2010, while investments almost doubled to $7.97bn from the 2009 figure, according to recent data.

Private equity firms divested a record 121 companies in India during the 12 months ending December 2010, up from 66 exits in the previous year, according to data from Venture Intelligence, a research service focused on private equity and M&A activities in India.

Among the 121 divestments, 24 exits were via IPO. In fact, private equity-backed companies raised approximately $2.2 billion through IPOs in 2010, with the largest being SKS Microfinance, which raised $359 million in August.

Prior to its listing on both the Bombay Stock Exchange and the National Stock Exchange of India, Hyderabad-based SKS Microfinance was backed by private equity investors including Sequoia Capital India, SVB India Capital Partners, Sandstone Capital and Kismet Capital. However, the company recently saw its shares plummet following the passage of a bill to rein in errant microfinance institutes (MFIs) in the state of Andhra Pradesh. The bill was put in place following a spate of suicides in the state, which were blamed on the aggressive lending practices of several MFIs.

According to a Venture Intelligence statement, other PE-invested companies that raised more than $100 million through IPOs last year include Orient Green Power, which was backed by Hong Kong-based pan-Asian private equity firm Olympus Capital Holdings Asia and venture firm Bessemer Venture Partners; A2Z Maintenance & Engineering Services, which was backed by India Equity Partners and Baer Capital; and Ramky Infrastructure, which was backed by IL&FS Investment Managers and Sabre-Abraaj, the joint venture of Dubai-based Abraaj Capital and Sabre Capital.

Significant exits through strategic sales included drug firm Paras Pharmaceuticals, which was sold to UK-based Reckitt Benckiser for $726 million by Actis and Sequoia, and RFCL, a life sciences and laboratory solutions company sold to US-based chemicals firm Avantor Performance Materials for an undisclosed sum by ICICI Venture.

On the investment front, 2010 saw private equity firms invest $7.97 billion across 325 deals in India, up from $4.07 billion over 290 transactions in 2009.

“After a volatile three-year period, PE investment activity in 2010 reverts to the levels of 2006, which had witnessed 358 investments worth $7.49 billion,” Arun Natarajan, CEO of Venture Intelligence, said in the statement.

The largest deal was the $425 million invested in power generation firm Asian Genco by investors including Morgan Stanley Infrastructure Partners, General Atlantic, Goldman Sachs, Norwest Venture Partners and Everstone Capital.

According to the statement, the most active private equity firm in India during 2010 was Sequoia Capital, which secured 15 investments with eight in IT-related companies. On the other hand, IFC, the World Bank’s private investment arm, remained the most active private equity investor, with 25 deals done in the country.