Private Equity- and Venture Capital-backed Cos; Raise $950-M via IPOs in 2005
Private Equity and Venture Capital firms obtained exits for their investments in over 40 Indian companies during 2005, including 17 via Initial Public Offerings (IPOs), a Venture Intelligence India study shows.
Chennai, India (PRWEB) January 28, 2006 -- Private Equity and Venture Capital firms obtained exit routes for their investments in 42 Indian companies during 2005, according to data from Venture Intelligence India (http://www.ventureintelligence.in), a division of TSJ Media. These figures compared favorably with the 30 liquidity events (including six PE-backed IPOs) during the previous year.
Seventeen PE & VC-backed companies raised about $950 million via IPOs during 2005, the Venture Intelligence India study showed. “The highly successful IPOs of PE-backed companies like Suzlon Energy as well as Oracle’s buyout of I-Flex in 2005 proved that the Bharti-Warburg Pincus deal was not a one-off and solidified the India story among international PE investors,” said Arun Natarajan of Venture Intelligence India.
“While it is encouraging for PE investors to see the emergence of a healthy climate for liquidity opportunities in India, it is early days as yet. It is crucial for PE and VC firms to demonstrate a successful track record of exits before marquee investors, especially foreign institutions, will consider investments into their future funds," said K.E.C. Raja Kumar, CEO of Bangalore-based UTI Venture Funds, which has already realized exits and distributed 60% of the capital of its first fund.
The largest PE-backed IPO during 2005 was that of wind energy turbine maker Suzlon Energy, which raised $342 million. The oversubscribed October IPO fetched spectacular returns for Suzlon’s private equity backers including Citicorp and ChrysCapital. Citicorp, which had invested $22.5 million in Suzlon in April 2004, sold shares worth $29.9 million as part of the IPO. Other top PE-backed IPOs during the year included that of Punj Lloyd, HT Media, YES Bank, Shopper's Stop and PVR Cinemas, the Venture Intelligence India study revealed. The year also saw early-stage focused SIDBI Venture Capital obtain its first exit via an IPO with the $6 million Compulink offering.
PE firms also realized some spectacular exits during 2005 via M&A and secondary deals. Warburg Pincus completed its exit from New Delhi-based listed telecom services company Bharti TeleVentures during 2005 - selling a 6% stake for $560 million via the public stock markets and a final 5.65% holding to UK-based Vodafone for $847.5 million. At the time of Warburg's final stake sale, Bharti was valued at $15 Billion – 10 times that when Warburg invested in the company five years ago. Warburg's total realization: over $1.6 Billion – i.e. more than 5.5 times its original investment amount.
Two other “trade sale” exits during 2005, the acquisition of CVC International’s stake in i-flex (by Oracle) and the exit of Actis and AIG from BPL Communications, also involved transactions worth over $500 million each, the Venture Intelligence India study showed.
“While the environment for PE investments has been excellent, it is more important for funds to focus and plan for profitable exits, especially in the light of the current valuation expectations. The true test of quality for a PE portfolio is its ability to exit and distribute returns. Indian PE market is relatively young and even leading funds are yet to witness more than one or two fund cycles," UTI Ventures’ Raja Kumar said.
About Venture Intelligence India
Venture Intelligence India, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity, venture capital and M&A deals in India and Indian-founded companies worldwide. For more information, please visit http://www.ventureintelligence.in
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