South India attracted the most number of private equity (PE) investments (162 deals worth $2.46 billion, or Rs13,470 crore) in 2012, with Bangalore-based companies leading the pack with 88 deals worth $1.17 billion.
According to data provided by PE research firm Venture Intelligence, the information technology and IT-enabled services sector saw the largest number of deals in the south, while the healthcare sector secured the top investment deals. Western India witnessed 126 deals with higher PE capital in terms of value, at $3.8 billion, and northern India saw 92 deals worth $2.37 billion, the data showed.
The 88 deals Bangalore witnessed last year include the $150-million investment e-commerce firm Flipkart Online Services received from Tiger Global, Accel India and Iconiq Capital. The presence of large number of technology firms makes Bangalore a favourite location for PE investments, said an expert, who preferred anonymity. “Historically, the Bangalore-Pune and Gurgaon-Delhi belts are known for the presence of technology firms which attract PE investments. However, the increase in the number of deals in south India should not be considered a trend,” the expert added.
Interestingly, seven of the top 10 deals, which saw fund infusion into unlisted companies, were in the healthcare sector, including India Value Fund’s $180 million infusion into Manipal Health Enterprises. Other major healthcare deals are the $110-million investment by Advent International in Hyderabad-based Care Hospitals, the $100-million investment by Olympus Capital in Kochi-based DM Healthcare and the $100-million investment by GIC in Tiruchi-based Vasan Eye Care.
“The top four deals in the healthcare industry took place in four major cities in the four states in south India—Bangalore, Hyderabad, Kochi and Tiruchi. Healthcare is one such sector which would not get affected by the global downturn,” said Arun Natarajan, founder of Venture Intelligence.
The year also witnessed Fidelity Growth Partners investing $75 million in Chennai-based medical devices firm Trivitron Healthcare; Equity Partners Fund pumping in $60 million into Bangalore-based biotech and bioinformatics firm Avesthagen, Goldman Sachs and NEA investing $54 million into day care surgery chain Nova Medical Centres.
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Deals in other sectors include JPMorgan’s $65-million investment in Bangalore-based engineering and construction firm Nandi Economic Corridor Enterprises and Goldman Sachs and KKR’s $53-million deal with TVS Logistics Services.
Multiples and Carlyle’s $41-million investment in South Indian Bank through a qualified institutional placement in September 2012 was another major deal. It is the nature of the segment that makes healthcare attractive to investors, especially when other sectors have been facing a downturn due to the global economic woes.
“This sector is recession-proof and considered a safe place to bet on when other sectors are not doing so well, in the overall economic situation, whether it is real estate or other economy-dependent sectors. Healthcare can not be linked with overall economy,” Natarajan said.
But, this could not be looked at as a trend that would continue in 2013, warned experts. With things looking better, going by the public market rebound and other trends, investors might look at the traditionally followed and risk-prone sectors.
“Not that the investment in healthcare sector will go down, but more riskier sectors will come into prominence. If the market continues to be volatile, healthcare will continue to stand out prominently,” said the industry expert quoted above.
| TOP INVESTMENTS IN SOUTH — 2012 | ||||
| Company | Amount (in $mn) | Investors | Month | City |
| Manipal Health Enterprises | 180 | India Value Fund | Sept | Bangalore |
| Flipkart | 150 | Tiger Global, Accel India, Iconiq Capital, Others | Feb | Bangalore |
| Care Hospitals | 110 | Advent International | Mar | Hyderabad |
| DM Healthcare | 100 | Olympus Capital | Jan | Kochi |
| Vasan Eye Care | 100 | GIC | Mar | Tiruchi |
| Trivitron | 75 | Fidelity Growth Partners | Oct | Chennai |
| Nandi Economic Corridor Enterprises | 65 | JPMorgan | Mar | Bangalore |
| Avesthagen | 60 | Equity Partners Fund | May | Bangalore |
| Nova Medical Centers | 54 | Goldman Sachs, NEA | Aug | Bangalore |
| TVS Logistics Services | 53 | Goldman Sachs, KKR | Apr | Madurai |
| Source: Venture Intelligence | ||||