Power of ideas 2012: August records highest deal flow for 2012

Large-ticket transactions have led the overall investment activity in August 2012. The value of investments announced in August 2012 is the highest since February 2008 on the back of a billion-dollar deal by Bain Capital. August 2012 also saw the return of large deals, with three transactions with value above $100 million, the highest during 2012. Exit activity also improved, with 10 non-IPO exits during the month, more than double that of July 2012. However, fundraising activity was subdued, with no successful fund closure announcements during the month.

INVESTMENTS

August 2012 witnessed a sharp increase in private equity investments, with deals worth $1.8 billion across 44 transactions. This steep increase was on account of Bain Capital’s purchase of $1 billion shares from existing private equity investors in Genpact – the largest transaction so far this year. Even excluding this deal, the overall deal activity improved, with the total value of investment being $810 million.

This itself is the highest aggregate deal value since July 2011. In terms of number of deals also, there has been a notable increase from 34 deals last month to 44 deals in August 2012. Comparing the deal activity with the corresponding month last year, the value of investments has increased three times from $591 million in August 2011.

However, the number of transactions was similar to August 2011 – 41 deals. Sectorally, technology dominated the deal value on account of Bain-Genpact deal. Infrastructure sector followed with investments worth $195 million across two transactions. This included Macquarie-SBI Infrastructure Fund’s investment of $150 million in Ashoka Concessions. Retail & Consumer Products sector witnessed highest number of deals, at seven, closely followed by Healthcare with six deals.

FUNDRAISING

Fundraising activity was rather lackluster , with no successful fund closure announcements during the month. Further, there was only one new fundraising announcement by IFCI Venture Capital Fund. The plan is to raise $200 million.

PEBACKED IPOS AND EXITS

Exit activity also improved significantly compared to the previous month. There were 10 non-IPO exits compared with four in July 2012. Notable exits include General Atlantic and Oak Hill’s exit from Genpact (to Bain) and DE Shaw’s exit from SIS (to CX Partners). As IPO markets remained frozen, there were no private equity-backed IPOs during August 2012.