Indian exits rise in number, drop in value

Recent data shows the number of exits through July rose 29% over the same period last year, but their total value fell 60% to $668m.

Private equity firms exited 31 Indian investments in the first seven months of 2009, a 29 percent increase compared to the same period last year. Despite the rising number, the total value of exits declined by 60 percent to $668 million.

Bombay Stock Exchange: exit route

The rising number of exits has been attributed to increased instances of private equity firms selling their stakes in publicly listed portfolio companies, according to Venture Intelligence, an Indian private equity-focused data service. 

“Most of the exits this year have been through public market sales, especially by private equity funds that made investments in 2004 and 2005,” Arun Natarajan, managing director and CEO of Venture Intelligence, told PEO. 

They are clearly using the buoyant stock markets this year to exit their listed portfolio companies at significant multiples of their investment values.

Arun Natarajan

There were 20 such exits from January to July this year, up from just three a year ago. In terms of value of exits through sales of stakes on the open market, there was a 79 percent increase to $283 million. Some of these exits include Lupin Laboratories and HT Media, both backed by Citi Venture Capital International; Standard Chartered Private Equity-backed Aurobino Pharma; and Warburg Pincus portfolio company Max India.

Natarajan said these firms have held on to their investments for more than three to four years, which is the typical exit time frame for most private equity firms. “They are clearly using the buoyant stock markets this year to exit their listed portfolio companies at significant multiples of their investment values,” Natarajan added.

While there was a sharp increase in the number of exits through sale of shares on the secondary market, there was a drop in the number of private equity-backed IPOs. There has been just one private equity-backed IPO worth $58 million this year through July, down from six a year ago.

The first seven months of the year also saw eight strategic sales being made by private equity firms, up from six last year. However, the total value of strategic sales dropped from $848 million to $287 million.

The period also marked a complete halt to secondary sales made to other private equity firms. Last year, there were seven such exits worth $120 million.