Making a comeback

Large private equity transactions have resurfaced in India after a long hiatus.

Private equity deal flow in India is back on track in 2010 after a substantial slowdown, which began in the latter part of 2008 and continued through 2009.

The $2 billion invested in the country during the first quarter of 2010 marked a three-fold increase over the $620 million invested during the same period in 2009. In fact, in only the first quarter of this year, private equity firms have already invested more than half of what they did in the whole of 2009 ($3.82 billion), according to Venture Intelligence, an Indian private equity-focused research service.

An interesting aspect of the study is the re-emergence of big-ticket (more than $100 million) transactions in the Indian private equity landscape in the first three months of 2010. For the first time since the July-September 2008 quarter, India saw five investments of more than $100 million.

Chief amongst these was the $425 million invested in Asian Genco, a power generation firm, in March. 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 invested in the company, the largest Indian deal of the year to date and the largest equity investment ever in India’s power sector.

Also in March, Coffee Day Holdings, a coffee procurement, processing and retailing company which owns India’s largest coffee house chain Café Coffee Day, was the recipient of a $220 million investment from Kohlberg Kravis Roberts, New Silk Route and Standard Chartered Private Equity. 

A month earlier, global media- and communications-focused private equity firm Quadrangle Capital Partners led a $300 million investment in Tower Vision India, a telecom tower management company, in a deal that included seven other institutional investors including other private equity firms.

Besides these large deals, the country is also seeing a number of smaller deals being completed, suggesting that private equity firms, both domestic and foreign alike, are beginning to deploy capital in the country more actively once again.