Funds fire away in 2006
If 2005 was the year for raising funds for leading PE players, 2006 was a year of funds deployment.
By TNN |
MUMBAI: If 2005 was the year for raising funds for leading PE players, 2006 was a year of funds deployment. Firm after firm stepped up the gas and dollars flowed freely into Indian companies.
Such was the momentum that PE firms have invested a big proportion of funds raised earlier, during the last 12 months. Take Kotak Private Equity, for instance. It invested 50% of its entire fund in the last one year. ChrysCapital, on the other hand, invested up to 42% of its $475-million fund within 12 months of raising it. Another aggressive fund CVC International invested more than $300 million in last one year from its $1.6-billion CVC International Growth Fund I. The now fully-invested fund was raised in May 2005 and had a 40% allocation for the Indian market.
No wonder, 2006 saw record investments of $7.5 billion with the PE biggies equipped with well grounded teams, good track record, and moolah in the bag firing on all cylinders. "Year 2006 has been an exceptional year for the Indian Private equity sector as well as our firm. We have invested more than $ 300 million in 16 transactions," says Ms Renuka Ramnath, CEO, ICICI Ventures.
The deal sizes also got bigger, allowing more money to be deployed in companies. For example, Actis investing from Actis India Fund 2 LP and Actis South Asia Fund 2 LP managed some large investments like Dalmia Cement ($31m), Nilgiri's ($40m), Paras Pharmaceuticals ($42m), and Phoenix Lamps ($56m). Citi fired away with Emaar MGF ($50m), Centurion Bank ($30m), GMR ($30m), and KS Oil ($25m), among others. "We focused on companies in growing sectors that had strong entrepreneurial promoters with a global vision," says Vivek Chhachhi, VP, CVC. Another PE powerhouse, Warburg Pincus totted $222 million from just four investments - Amtek Auto, Aryan Coal, Writers and Publishers and Lemon Tree.
The firms largely stuck to the investment philosophy that they have followed and honed over years, but they also indulged in a bit of opportunistic investing to capture growth in hot sectors. ���During 2006, Actis continued to increase its focus on the MBO/MBI theme, combined with a sector approach focusing on emerging sectors such as healthcare services and food/franchised retail,��� says Donald Peck, MD, Actis.
Interestingly, some firms have quietly managed to invest substantial sums without making much noise in the market. A
One of the key reasons for the big investments by established players was event-based investing in some sectors. "Acquisition financing was one window of opportunity for the PE players last year along with opening up of new sectors like textiles, real estate and engineering and construction services. The last sector saw more than 30 deals last year which was totally ignored in 2005," says Arun Natarajan, CEO, Venture Intelligence.
The 2006 momentum seems to have carried into 2007 as well - January has already seen three big PE investments - NSE, Oberoi Construction, and Nimbus - and the year later may witness bigger investments. Insiders, however, have an interesting take on the fund deployment frenzy. They say more capital deployed means more management fees for PE managers and with more deals and better money 2007 may yet be a whopper again.
Such was the momentum that PE firms have invested a big proportion of funds raised earlier, during the last 12 months. Take Kotak Private Equity, for instance. It invested 50% of its entire fund in the last one year. ChrysCapital, on the other hand, invested up to 42% of its $475-million fund within 12 months of raising it. Another aggressive fund CVC International invested more than $300 million in last one year from its $1.6-billion CVC International Growth Fund I. The now fully-invested fund was raised in May 2005 and had a 40% allocation for the Indian market.
No wonder, 2006 saw record investments of $7.5 billion with the PE biggies equipped with well grounded teams, good track record, and moolah in the bag firing on all cylinders. "Year 2006 has been an exceptional year for the Indian Private equity sector as well as our firm. We have invested more than $ 300 million in 16 transactions," says Ms Renuka Ramnath, CEO, ICICI Ventures.
The deal sizes also got bigger, allowing more money to be deployed in companies. For example, Actis investing from Actis India Fund 2 LP and Actis South Asia Fund 2 LP managed some large investments like Dalmia Cement ($31m), Nilgiri's ($40m), Paras Pharmaceuticals ($42m), and Phoenix Lamps ($56m). Citi fired away with Emaar MGF ($50m), Centurion Bank ($30m), GMR ($30m), and KS Oil ($25m), among others. "We focused on companies in growing sectors that had strong entrepreneurial promoters with a global vision," says Vivek Chhachhi, VP, CVC. Another PE powerhouse, Warburg Pincus totted $222 million from just four investments - Amtek Auto, Aryan Coal, Writers and Publishers and Lemon Tree.
The firms largely stuck to the investment philosophy that they have followed and honed over years, but they also indulged in a bit of opportunistic investing to capture growth in hot sectors. ���During 2006, Actis continued to increase its focus on the MBO/MBI theme, combined with a sector approach focusing on emerging sectors such as healthcare services and food/franchised retail,��� says Donald Peck, MD, Actis.
Interestingly, some firms have quietly managed to invest substantial sums without making much noise in the market. A
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PE firm SAIF Partners invested more than $150 million in six deals during the last year and with the recent NSE investment the total sum invested in last 12 months would tot up to a very respectable $200 million. "SAIF's Pan Asia footprint translates to a larger fund size than most other India dedicated funds and that enables us to make big tickets investments. And we retain the flexibility to pursue relatively smaller deals as well," says Vibhor Mehra, VP, SAIF Partners. One of the key reasons for the big investments by established players was event-based investing in some sectors. "Acquisition financing was one window of opportunity for the PE players last year along with opening up of new sectors like textiles, real estate and engineering and construction services. The last sector saw more than 30 deals last year which was totally ignored in 2005," says Arun Natarajan, CEO, Venture Intelligence.
The 2006 momentum seems to have carried into 2007 as well - January has already seen three big PE investments - NSE, Oberoi Construction, and Nimbus - and the year later may witness bigger investments. Insiders, however, have an interesting take on the fund deployment frenzy. They say more capital deployed means more management fees for PE managers and with more deals and better money 2007 may yet be a whopper again.
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