2012 has not been a good year for private equity (PE) investments, which reported a 14.7% drop to $8.9 billion in 2012. Number of deals also dropped by 16% to 406.
These figures, include VC investments and exclude PE investments in real estate - taking the total investments by PE firms over the past five years to about $41.4 billion across 2,036 transactions.
According to Venture Intelligence Data, PE firms invested $8,853 million over 406 deals from January to December 2012 as compared to the $10,378 million across 483 deals during the previous year.
October-December 2012 quartered down by over 32% to around $1,010 million (across 82 deals) compared to the $1,490 million invested (across 121 deals) in the same period in 2011 and $3,849 million invested (across 108 deals) in the immediate previous quarter.
PE managers are more being judicious and taking longer period to deploy their funds, commented KEC Raja Kumar, founder and CEO of the PE firm Ascent Capital.
"The fact that the environment has continued to be challenging for new fund raising has also contributed to the investment slowdown. Limited Partners interest in Indian PE funds continues to be lukewarm. This would change provided the current rally in public markets results in exit realisation for PE funds," the report quoted Kumar as saying.
Top Investments
The two largest PE investments announced in 2012 were both in the BPO sector - the $1,100 million buyout of medical transcription specialist M*Modal (formerly CBay Systems) by JP Morgan unit One Equity Partners and the $1,000 million investment by Bain Capital and GIC in Genpact (by buying out the stake of existing PE investors General Atlantic and Oak Hill).
Both of these transactions happening in the July to September 2012 quarter contributed to the period becoming an outlier. The next largest investment was Morgan Stanley’s $210.5 million commitment to Continnum Wind Energy, a Singapore headquartered firm developing wind assets in India’s Kutch region.
| Top PE Investments | ||||
| Company | Sector | Amount (US $M) | Investors | Date |
| M*Modal | BPO (Medical Transcription) | 1,100 | JP Morgan | July-12 |
| GENPACT | BPO | 1,000 | Bain Capital, GIC | Aug-12 |
| Continuum Wind Energy | Renewable Power Projects (Wind) | 210.5 | Morgan Stanley | June-12 |
| Thomas Cook India | Travel Services | 180 | Fairbridge Capital | May-12 |
| Manipal Health Enterprises | Hospitals | 180 | India Value Fund | Sept-12 |
| By Reported Size, Source: Venture Intelligence PE Deal Database | ||||
By Industry
With 162 investments worth about $3,243 million, Information Technology and IT-Enabled Services (IT & ITES) companies topped in terms of both investment value and volume during 2012. The $150 million fourth round investment raised by e-commerce leader Flipkart was the next largest after the two mega BPO deals in the IT industry.
Powered by four investments worth $100 million or more in the hospitals segment, Manipal Health Systems, Care Hospitals, DM Healthcare and Vasan Eye, the Healthcare & Lifesciences industry absorbed $1,225 million across 48 deals.
Led by Warburg Pincus’ $145 million buyout of listed NBFC firm Future Capital, the BFSI industry was the third favourite accounting for $890 million across 43 deals.
Energy companies – powered by the interest in wind power development companies in the first half 2012 – came in next attracting $478 million across 20 investments.
By Stage
Late Stage deals accounted for 24% of the investments in volume terms and 26% in value terms during 2012, the research showed. Buyout deals accounted for 4% in volume terms and 22% in value terms. Venture Capital investments accounted for 51% in volume terms and 9% in value terms. Listed company investments accounted for 13% in volume terms and 25% in value terms.
By Region
While companies in South India attracted the most number of investments (162 deals worth $2,460 million), companies based in Western India attracted the maximum PE capital in terms of value ($3,799 million across 126 deals) during 2012. Companies in North India attracted investments worth $2,370 million across 92 deals.
Among cities, Bangalore-based companies attracted the most number of investments (88 investments worth $1,170 million), followed by companies in the National Capital Region (with 87 investments worth $2,319 million). Mumbai-based companies attracted 85 investments worth $2,856 million).
Most Active Firms
With 17 investments each during 2012, Sequoia Capital India, IFC and Accel India were the most active PE investors in India during 2012. Among seed level funds, Blume Ventures was especially active investing across 23 transactions during the year.
JP Morgan vaulted to the top of the value charts for the year with $1,265 million (across M*Modal and toll roads firm Nandi Economic Corridor Enterprises), while Bain Capital followed next with its $850 million investment in Genpact. IFC came in third with investments worth $495 million.
Private Equity in Real Estate
Private Equity-Real Estate firms made 43 investments in the Real Estate segment during 2012, the Venture Intelligence analysis showed.
Of these, 35 transactions had an announced value of $1,145 million. The activity level was almost 38% lower compared to the 69 investments ($2,693 million across 54 announced deals) in 2011. Residential projects accounted for 65% of the investments (by volume) during 2012, followed by commercial projects with a 16% share of the pie.
Blackstone’s proposal to acquire a stake in the office space portfolio of Bangalore-based developer Embassy Property Developments for a reported $230 million (Rs.1,300 crore), was the largest proposal reported during 2012. The other large PERE investments during the year included Morgan Stanley’s $94 million (around Rs 500 crore) investment in Supertech’s township project in Noida and the same investor’s $90 million commitment in Sheth Developers.