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Private Equity Track


Research4India Weekly update on the Indian PE Sector

PE Activity for the week


During the week ended 05th Aug, 2012, there were 12 PE/VC deals worth $1.1bn compared to 7 deals worth $34.2mn in the previous week. Out of the total, 5 were early stage deals, 4 were growth stage deals and 4 were PIPE deals. In the largest deal during the week, Bain Capital Partners has agreed to buy around 30% stake in the business process management and technology services company Genpact Ltd for $1bn.

1200.0 1000.0 800.0 600.0 400.0 200.0 0.0 29th July'12 PE Investments 34.2 7

1100.9

16 14 12 10 8 6 4 2 0

12

5th Aug'12 No. of Deals

PE Deals During The week

Investor (s)

Target

Stake (%)

Value ($mn)

Stage

Sector

Industry

Segment

Bain Capital Brick Eagle Capital L Capital Oman India Joint Fund Saif Partners Lok Capital, Omidyar Network, Elevar Equity Advisors, SVB India Accel Partners Sequoia Capital Foundation Capital, Inventus Capital SBI Holdings (Japan) Rare Enterprises Acumen Fund

Genpact Xrbia Developers PVR, subsidiary Solar Industries India Ammi's Biryani Vistaar Financial Services Pvt Ltd

30 NA NA 4.28 NA

1000.0 36.0 19.6 13.0 7.2

PIPE Growth PIPE PIPE Growth

Services Construction Services Manufacturing Services

IT/ITeS Real estate M&E Misc Retail

BPO Housing Recreation Explosives Restaurant

NA

7.2

Growth

Services

BFSI

NBFC

Universal Collectabillia Practo Technologies Wealth India Financial Services Liqvid eLearning SpiceJet Edubridge Learning

NA NA NA NA 0.5 NA

5.0 4.6 3.6 3.0 1.4 0.3

Early Early Early Early PIPE Early

Services Services Services Services Services Services

Misc. Services IT/ITeS BFSI Education Travel & Tourism Education

Merchandis e firm Software Fin services portal e-learning Airlines Services

Source: Four-S PE Database

Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. For subscription / custom queries, please contact Seema Shukla at seema@four-s.com.

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Bain Capital buying 30% stake in Genpact for $1bn L Capital to subsidiary invest $19.6mn in PVR,

PE firm Bain Capital Partners has agreed to buy around 30% stake in the business process management and technology services company Genpact Ltd for $1bn. The stake held by the existing investors of the company General Atlantic and Oak Hill Capital will be bought at $14.76 per share with an additional $2.24 per share of special dividend. The two investors still hold a 10%,
which will be worth another $382mn. Bain Capital has agreed not to sell any Genpact share for a period of two-and-a-half years. Four-S Comment: General Atlantic and Oak Hill bought 60% in Genpact in 2004 for $500mn. They subsequently reduced their stake to little over 40% after 2 rounds of sale. In this round of exit, they are estimated to have pocketed around $1.62bn (Bain deal of $1bn and special dividend) for 30% stake sale, thereby making around 6.5x return on investment. BPO and IT Services sector seems to be completing its first cycle of exits. Last year also saw some high profile PE exits in the sector - Blackstone exiting Intelenet by selling its majority stake to UKs Serco in a $634mn deal and General Atlantic selling Patni Computers stake for $254mn.

L Capital Asia has picked a 10% stake in Ajay Bijli-promoted PVR Ltd for Rs 577mn through a preferential issue. The fund will also invest Rs. 500mn to set up a joint venture with PVR, PVR Leisure Ltd, which will focus on in-mall entertainment, gaming, food and leisure. L Capitals holding in the venture will be 44%, with PVR taking 51% and the remaining going towards management stock options. PVRs existing investment in the bowling-alley business PVR BluO Entertainment Ltd, a joint venture established in 2009 with Thailandbased Major Cineplex, will now be held through this new company. Four-S Comment: PVR, which expanded from single screen theatre in New Delhi, has earlier seen interest from private equity investor. ICICI Venture had invested in the company in 2003 and 2005 totalling Rs 470mn. The PE firm made multiple partial exits from PVR starting with a pre IPO deal and subsequent open market deals thereby exiting completely in 2007 for Rs 1.95bn, making nearly 4x its investment. ICICI Venture again bought into the company in 2008 and currently holds a 7.79% stake.

Oman India Joint Investment Fund invests in Solar Industries Industrial explosives maker Solar Industries India has struck a deal to raise Rs 720mn ($13mn) from Oman India Joint Investment Fund through a preferential allotment for 4.28% stake. Founded in 1995, Nagpur-based Solar Industries (formerly Solar Explosives Ltd) has a capacity of over 2.8 lakh MT of explosives (with over 2.1 lakh MT of bulk explosives and the rest being cartridge explosives), 190 million detonators and 75 million metres of detonating fuse. It claims to have increased market share in India from 24% to 27% in FY12. Four-S Comment: The annual market of civil explosives in India is approximately Rs 22.50 bn which is around 5% of the global civil

Brick Eagle Developers

Capital

invests

in

Xrbia

Brick Eagle Capital Group is investing Rs 2bn in five projects of Xrbia Developers Limited, affordable housing venture promoted by the Eiffel group. The fund has invested Rs 400mn in the first development and the rest of the money will go into the remaining ventures. The five projects will come up in the area of Karjat, near Mumbai, on 150 acres acquired by Brick Eagle and will be developed in partnership with Xrbia. The Group's realty footprints span across Pune, Mumbai, Nagpur, Delhi & Bangalore, with over 25 mn sft. of existing development and 119 mn sft of planned projects.

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explosive consumption and is growing at a CAGR of 20%. In India, the mining sector accounts for 80% demand for civil explosive which in turn is dominated by coal mining and the balance 20% is for infrastructure projects like roads, hydro engineering, irrigation etc. India is the worlds eighth-largest explosive manufacturer. As the industry is tightly regulated most of the industry is in the organized sector with ICI India, Gulf Oil, Indian Oil Corporation and Solar Industries are the leading players. raised $7.2mn (Rs 400mn) in Series B funding from Lok Capital and Omidyar Network besides existing investors Elevar Equity Advisors and SVB India Capital Partners. Vistaar caters to the underserved market of small and micro enterprises (MSMEs), estimated to comprise over 26 million companies. The funds raised will be utilised to expand Vistaars current network to 180 branches across the country over the next four years, with a projected portfolio of over Rs 16bn.

SAIF Partners investing $7.2mn Ammi's Biryani SAIF Partners is investing Rs 400mn or $7.2mn in TMA Hospitality Services Pvt Ltd, which owns QSR chain Ammi's Biryani. The investment comes after SAIF Partners set up a Rs 1bn ($18mn) investment vehicle, Zooropa Foods Pvt Ltd, to invest and manage a chain of quick service and casual dining restaurants. Ammi's Biryani currently operates in Bangalore and was founded in 2008 by Navaj Sharief. It operates primarily as a take-away and delivery chain with 13 locations in Bangalore. Four-S Comment: Quick-service restaurants (QSRs) that operate in the value-for-money segment, are catching the fancy of PE/VC players. QSRs continue to report annualized growth figures of 25% to 30% and operate on minimum gross margins of 20%, despite the sullen economic mood. The sector is being driven by the younger generation, who continue to spend. Recent investments include Punebased QSR chain focused on selling seafood and fish products, Fishtro, raising $5mn from Correa Hospitality. Steammo also raised seed funding from IncuCapital earlier this year. Last year saw firms like Faaso's (Sequoia Capital) and Goli Vada Pav (Ventureast) raising money.

Accel Partners Collectabillia

invests

in

Universal

Accel Partners has committed about $5mn in Universal Collectabillia, a celebrity merchandise and brand extension firm jointly owned by Anjana Reddy, who is part of the Deccan Chronicle family, and cricket legend Sachin Tendulkar. Collectabillia's business model now includes helping celebrities extend their brand beyond careers and has recently struck a deal with southern movie star Rajnikanth. It has similar deals with Sachin Tendulkar and tennis player Sania Mirza, besides owning rights for any sporting memorabilia related to Tendulkar.

Sequoia Capital invests in online clinic management platform Practo Bangalore-based Practo Technologies Pvt Ltd, a web-based clinic management software developer, has raised Rs 250mn (around $4.6mn) from Sequoia Capital in a Series A round of funding. Practos flagship product is Practo Ray, a web-based software tool which provides automated appointment scheduling and storage of healthcare records including Xrays, files, prescriptions and billing. The money raised will be used to launch its various products globally and expand Practos 80member team to around 350 over the next two years.

Vistaar raises $7.2mn from Lok Capital, Omidyar, Elevar & SVB Bangalore-based Vistaar Financial Services Pvt Ltd, a small enterprise financing firm, has Research4India 3

Private Equity Track


Wealth India Financial raises Rs 200mn for expansion plans Wealth India Financial Services, promoters of online investment services platform FundsIndia.com, has raised Rs 200mn from existing as well as new investors. The fund raising was led by venture capital firm Foundation Capital with follow on investments from current investors Inventus Capital. The investment will be used by FundsIndia to expand customer base and enhance the companys online platform with new products and services. FundsIndia.com is a transactional platform that allows users to link their bank accounts with investment options like mutual funds, equities, and fixed deposits, with options for managing multiple accounts, and automatically triggering investment related activities. 560mn for the recent quarter after five consecutive quarterly losses. SpiceJet, part of the Sun Group is a low-cost airline headquartered in Chennai. It began service in May 2005 and by 2008, it was India's secondlargest low-cost airline in terms of market share. Last year, Kalanithi Maran invested Rs 1bn into SpiceJet Ltd and increased his stake in the budget carrier to 48.6%.

Edubridge Learning secures Rs 15mn from Acumen Fund Acumen Fund, a non-profit global venture fund which focuses on poverty alleviation across Africa and South Asia, has put in Rs 15mn ($300,000) in Mumbai-based education services provider Edubridge Learning Pvt Ltd. Edubridge provides vocational training for low-income youth across Maharashtra, Tamil Nadu, Karnataka and Chhattisgarh. Edubridge targets the youth aged between 18 and 25, who are typically the first formally employed members of their respective families. Till date, the company has trained over 1,500 students and with this investment, Edubridge plans to scale its services from 12 to 30 centres over the next two years.

E-learning firm Liqvid raises $3mn from Japan's SBI Holdings Liqvid eLearning Services Pvt Ltd, an integrated e-learning content solutions company, has raised $3mn in funding from a subsidiary of SBI Holdings, Japan. Headquartered in Noida, with offices in Bangalore, Singapore and the US, Liqvid provides technology-aided English Learning and Training (ELT) solutions to individuals and organisations under the brand EnglishEdge. The content can be accessed via PC, tablet and mobile, and the company claims that EnglishEdge has more than 2,50,000 learners across schools, colleges, vocational institutes and more. Its key institutional customers include IIT Delhi, Jamia Millia, Pinegrove School, Kimberley International School, Shemford Schools, British Council and Educomp, among others.

Fund Raising & Liquidity Events


Morpheus Capital to close debut fund Morpheus Capital Advisors is raising Rs 4.75bn for its final closure of its consumer goods focused fund. The fund is targeting affluent investors, non-banking finance companies, banks and foreign investors for its fund. Last year, the fund made its first closure by raising Rs 4.25bn, which aimed to invest in the development of consumer brands. Headed by former IMG India Chief - Babul Nayar, Morpheus will invest in companies operating in food and beverages, apparel & retail, beauty & wellness, travel & tourism and education sectors. It plans to invest in consumer-related companies that have put in place innovative business strategies and technology. 4

Rakesh Jhunjhunwala invests in SpiceJet Rakesh Jhunjhunwala has invested around R76.9mn in SpiceJet through its arm Rare Enterprises. The company acquired around 0.52% stake in the company. The investment came after SpiceJet posted a net profit of Rs Research4India

Private Equity Track


BanyanTrees second fund hits first close, reaches close to $100mn Banyan Tree Finance Pvt Ltd, advisors to BanyanTree Growth Capital, a structured private equity fund that provides capital to middle market companies, has raised close to $100mn at first close for its second fund BanyanTree Growth Capital II LLC. The fund is targeting a corpus of $175mn to be raised by the end of this year. The capital has been raised from global institutional investors across Asia, the US and Europe. The fund will stick to its earlier investment philosophy and focus on growth capital in the manufacturing and SME space for investments.

Private Equity News


Star Health looking for PE funding Star Health and Allied Insurance Company is planning to raise Rs 1.5bn PE funds for a 6-8% stake in the company. Its holding company Star Health Investments Pvt. Ltd (a SPV for promoting the insurance company) had received a similar funding from Sequoia Capital (to bypass the 26% FDI rule) earlier in November 2010 and ICICI Venture (Rs 1.2bn) in the same year. The company was trying to tap the retail insurance segment as announced in 2009 during when it had 80% of premium income from the Government Health schemes and rest from the retail segment.

IndoUS Venture Partners raises $149mn for new fund IndoUS Venture Partners, a venture capital firm based in Bangalore, has raised $149mn for IndoUS Venture Partners II, LLC. While the venture capital firm has put $150mn as the total offering amount, this may not be the final close and the fund could be looking to raise up to $175mn. The fund made its first sale in October 2011, raising $97.5mn, and reached $132.5mn in April this year. Some of the recent investments made by the VC firm include baby products e-commerce venture Hushbabies.com and digital magazine store Magzter Inc. In 2011, IndoUS Venture also exited pharma retail chain MedPlus Health Services in a secondary deal in which it reportedly made 4x return.

India Value Fund to invest up to $180mn in Manipal Hospitals In what will be the largest private equity investment in an Indian healthcare firm, India Value Fund Advisors (IVFA) is committing up to Rs 10bn ($180mn) to Manipal Hospitals to rollout an aggressive inorganic expansion strategy over the next 4-5 years. In the first leg of the transaction, Manipal Hospitals is set to get Rs 3bn over the coming weeks from IVFA and investment will increase as we start acquiring assets in secondary & tertiary healthcare service providers besides day care surgery centres.

Kotak Realty Exits Lalith Gangadhar Kotak Realty Fund is exiting its investment in Lalith Gangadhar Constructions Private Limited, with around 10 times return on its investment in 2007. Kotak is selling its 49% stake for Rs 530mn to the promoters. The fund invested invested Rs 50mn for 49% stake in the real estate firm in 2007. Later in 2008, it invested rs 450mn in Lalith Gangadhars high-end villa project in Bangalore called LGCL Ashler.

Cox & Kings UK arm to raise $100mn from CVCI Mumbai-based travel services provider Cox & Kings Ltd is close to signing a deal to raise $100mn from Citigroups private equity arm Citigroup Venture Capital International (CVCI) for its UK-based arm. The company, which acquired UK-based Holidaybreak Plc last year, will use the money to part-retire its debt of Rs 12.5bn. In May this year, the company said that its board had approved investment of up to $140mn in Prometheon Holdings (UK) Ltd (a 5

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wholly owned subsidiary of the company) from an institutional investor. Jupiter Infomedia subscription IPO opens for

IPO, Other Offerings


Muthoot Capital Services shares sale offer oversubscribed The offer to sell shares of Muthoot Capital Services by six of its promoters was oversubscribed. The offer for sales of 3,09,165 shares, received bids for 3,09,187 shares, the data showed. The floor price for the sale is Rs 90 apiece. Based on the minimum bidding price, sale of 3,09,187 lakh shares would fetch over Rs 27.8mn to the company.

The Rs 40.8mn IPO of Jupiter Infomedia , a web infomedia company with online publications on business, encyclopedia and yellowpages, opened for subscription on July 31. It has fixed the issue price at Rs 20 a share and planned to offer 20.4 lakh equity shares through the issue, which closed on August 1. Jupiter Infomedia intends to use issue proceeds for purchasing and setting up of offices in Mumbai and Kolkata; renting offices in Ahmedabad, Chennai and Delhi; and initial operating expenses for the marketing/branch office (first three months).

M&A Activity for the Week


During the week ended 5th August, 2012, there were 6 M&A deals worth $637mn (size of 2 deals were not known). In the largest deal during the week, Sahara Group bought New Yorks Plaza Hotel for $570mn.

Acquiror Sahara Group PhillipCapital Group Dhunseri Petrochem & Tea Hero MotoCorp Birla Shloka Edutech Ltd InMobi Source: Four-S PE Database

Target Plaza Hotel MF Global Sify Securities India Pvt Ltd - Sify's stake Global Tea & Commodities - 2 tea estates Erik Buell Racing Ojus Healthcare Pvt Ltd Metaflow Solutions

Sector Hotel BFSI F&B Racing company IT/ITeS M-Vas

Stake (%) NA 29.85 NA NA 51.1 NA

Deal value ($ mn) 570.0 25.0 22.0 20.0 NA NA

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Market Update
Key Domestic Indices
Indian Market Movements Index BSE Sensex S&P CNX Nifty CNX Nifty Junior Nifty Mid Cap 50 CNX IT Bank Nifty CNX Infrastructure CNX Realty 27-Jul-12 16,839.19 5,099.85 9,783.80 2,002.20 5,562.00 10,140.55 2,289.00 208.25 3-Aug-12 Change (%) 17,197.93 5,215.70 10,093.90 2,085.50 5,697.15 10,315.60 2,366.50 217.95 2.09% 2.22% 3.07% 3.99% 2.37% 1.70% 3.27% 4.45% High 18,944.60 5,629.95 11,145.70 2,481.60 6,811.30 11,226.75 3,077.10 299.65 52 Week Low 15,135.86 5,129.35 9,988.80 2,088.35 5,602.70 10,295.10 2,348.00 219.15

Key Global Indices


Global Market Movements Index NASDAQ Dow Jones Industrial Average S&P 500 NIKKEI 225 Hang Seng Straits Times Index FTSE 100 27-Jul-12 2,958.09 13,075.66 1,385.97 8,566.64 19,274.96 2,998.49 5,627.21 3-Aug-12 Change (%) 2,967.90 13,096.17 1,390.99 8,555.11 19,666.18 3,051.33 5,787.28 0.33% 0.16% 0.36% -0.13% 1.99% 1.73% 2.77% High 3,134.17 13,338.66 1,422.38 10,255.20 22,808.33 3,227.28 5,989.07 52 Week Low 2,298.89 10,404.49 1,074.77 8,135.79 16,250.27 2,521.95 4,791.01

Source: Google Finance, Yahoo finance

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About Research4India

Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. These reports will be available on our upcoming site www.research4india.com, as well as from leading international research sellers like Thomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc.

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