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January 24, 2006
Chennai, India
Contact Information:
Arun Natarajan
Tel: +91-98410-10521
Email: arun@ventureintelligence.in
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:
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 |
