Private equity



Private equity activity was largely sedate in February. The month saw a drastic fall in PE deal value and volumes compared to February 2010 as well as January 2011, reveals the Ernst & Young Private Equity Flash Report. There, however, was a modest pick up in PE exits and fund-raising activity. Here's a quick recap of the PE action for February 2011.

Investments

Deal values during the month saw a significant dip. The total announced deals aggregated to about $300 million (Rs 1,350 crore), about 39 per cent lower than that reported in January 2011. The deal value is also a good 38 per cent lower than what was reported a year ago in February 2010. Deal volumes, however, were a mixed bag. While it registered a growth over the year-ago period, there was a sequential drop in the number of deals. The month saw 21 PE deals compared to 28 in January 2011 and 18 in February 2010.

In terms of sector preference, it was the financial services sector that saw the highest (54 per cent) share of the total deal value. This was followed by real estate that made up 15 per cent of the total investment pie. Contrastingly, it was infrastructure and media and entertainment sectors that had enjoyed top shares in January.

The largest deal for the month was that of Ratnakar Bank, which raised $150 million (about Rs 675 crore) from a clutch of PE investors, including TVS Capital, Beacon India Private Equity Fund, Cartica Capital, Faering Capital and Norwest Venture Partners.

Fund Raising

Fund raising action saw a definite pick up after a two-month lull, with three funds raising $698 million (about Rs 3,100 crore) while another announced its raising plans. Among the funds that closed in February 2011 are the $550 million (about Rs 2,500 crore) fund raised by Everstone Capital Partners, the $94 million (about Rs 400 crore) consumer brands — focused fund raised by Morpheus Capital and the $54 million (about Rs 240 crore) early-stage investment fund by Seedfund.

PE Exits

There was significant activity in private equity exits too, with a total of seven exits during the month. That said, for the second month in a row, there were no exits through the IPO route, thanks to sluggish activity in the capital markets. Among the major exits were Guggenheim Partners exit from its two investments — Vikram Logistics and Maritime Services and India Hydropower Development Company; New Silk Route Partners stake sale in Destimoney Securities to the UK-based entrepreneur, Raghuvinder Kataria, Citi Venture Capital 3.57 per cent stake sale of its 4.97 per cent shareholding in JBF Industries in the open market.

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