Summit Partners may shut India shop soon

India, where private equity (PE) investors are struggling to make profitable exits, is witnessing more closure of funds. The latest to join the list might be Summit Partners, a US-based fund which entered India in 2010; Summit is likely to close down its Indian operations soon, according to people in the know.

In 2012, Boston-based growth equity investor Summit Partners had set up its India office in Mumbai after two years of debut investment in the country. Summit invested $30 million in Krishidhan Seeds, a Pune-based commercial seeds manufacturer in 2010.

However, the Krishidhan deal turned sour as differences erupted between fund managers and Krishidhan's promoters over corporate governance issues. Later, in 2012, Summit approached Mumbai-based law firm to settle the issue with a demand that the promoter buy back Summit's stake. According to sources, Summit has written off its investment in Krishidhan. At present, Summit's global website does not include Krishidhan's name as its portfolio company.

Following the bitter experience and the inability to seal any new deals since it started India investments in 2010, Summit's management has decided to wind up the India operations, sources said. Queries sent on February 25 to Summit's global spokesperson and India head, Amit Chaturvedy, did not elicit any responses till date.

Through its Boston office, Summit had acquired a significant stake in Zenith RMM LLC, business unit of BSE-listed Zenith Infotech. Founded in 1984, Summit Partners has raised nearly $15 billion in capital and invested in more than 380 companies in technology, health care and other growth sectors. Notable companies financed by Summit Partners include Belkin International, Continuum, FleetCor Technologies, Fortegra Financial, Global Cash Access, McAfee, Ogone, OptionsXpress and SeaBright Insurance.

Over the past two years, a number of PE funds have either shut their Indian shops or downsized the operations following issues such as lack of exits, stiff competition and tough regulatory hurdles in the country.

Sanjeev Krishan, leader, private equity at Pricewate-rhouseCoopers India said, "Over the last three years, the PE industry has seen some consolidation, particularly in the growth market investors category - this is owed to a number of reasons, including poor or negative returns on investments made, lack of exits and some of them have not managed to raise fresh funding as a result."

UK-based fund 3i had decided to stop its investments in India, restructured its management where its Asia head Anil Ahuja and partner Girish Baliga quit the fund. Similarly, Standard Chartered Private Equity's co-head and three managing directors - Ravinder Singh Grewal, Mukul Nag and Rahul Raisurana - quit after the PE firm decided to scale down operations.

Other firms such as Arka Capital, Alpha Insight, Jardine Rothschild, Kubera Partners have shut shops while Aureos Capital (acquired by Abraaj), Navis Capital Partners and DE Shaw also reduced their staffs as well as exposure to India.
DEAL GONE SOUR

• Summit invests $30 mn in Krishidhan as debut deal in 2010
• Summit sets up office in Mumbai in 2012
• In 2012, Summit moves legally against Krishidhan over alleged corporate governance issues
• Summit said to have written off investment in Krishidhan