Big-ticket deals boost value in May

May 2013 witnessed a significant increase in the investment value ($2.1 billion across 30 deals), just marginally lower than the aggregate investments in the first four months of calendar 2013 ($42.4 billion across 140 transactions).

Global funds continued to dominate the large deal space. However, with the capital investment cycle still not picking up, the investment activity in mid-sized companies space remains slow.

Fundraising remained static, with just two new successful fund raises announced during the month. Exit activity also remained slow and at similar levels as past few months with only nine non-IPO exits. Compared to this, for the past few years, there have been 25 to 35 investments every month. This is leading to a build-up in exit backlog only.

INVESTMENTS

While the aggregate investment value increased by 72% during May 2013, the number of deals declined by 48%. April 2013 clocked $1.2 billion across 51 deals. The value is significantly high when compared with May 2012. However, the number of deals is at par. There were 31 deals with investment value of $408 million during May 2012.

The substantial increase in the deal value during the month was due to a large, billion-dollar deal–Qatar Foundation Endowment’s investment of $1.26 billion in Bharti Airtel. This is the second largest PE investment ever in India. Interestingly, the largest investment was also made in the same company.

During July 2007, Temasek had invested close to $2 billion in Bharti Airtel, which is the largest PE deal in India.

May 2013 witnessed a total of seven deals having deal value of $50 million and above–almost half of the total 15 such deals during five months ended May 2013. These seven deals contributed nearly 90% of the total deal value during the month.

Sectorally, Telecom received the highest investment followed by Cement and Building Products, due to a large deal each in the respective sectors. In terms of deal volumes, Retail and Consumer Products and Real Estate sectors, with six deals each, were most active, followed by Technology with five deals.


FUNDRAISING

Fundraising during the month remained at the levels of April 2013, with two successful fundraise announcements: $250 million by Indospace Logisitcs Park fund of Everstone Capital; and $13.5 million first close by Infuse Ventures, with focus on incubation of companies in sustainable energy and clean technology sector There were two new fund raising plans announced totaling close to $1 billion: $600 million Infrastructure focused fund by IL&FS Investment Managers and Standard Chartered Private Equity; and $360 million Alternate Investment Fund by KKR India.

EXITS

May 2013 witnessed nine non-IPO exits compared to 11 during April 2013. Buyback and Open market exits accounted for most exits. Out of four buybacks, three were in the RE space. There were no PE-backed IPOs during the month. Noted exits include Warburg Pincus from Havells India and TPG Capital from Shriram Transport Finance Company, both through the open market route, and Apollo Management from Welspun Maxsteel through buyback . Investment value climbs 72%, backed by the second largest deal till date, but number of deals down 48%.