PE deal value up at $19,198 m in Q4

Written by Sajan C Kumar | Chennai | Updated: Apr 7 2010, 02:56am hrs
Getting out of the shocks of a turbulent 2009, private equity investments in India have been displaying steady signs of recovery in 2010. Displaying clear indication of an uptick, the latest quarter registered the highest value of deals since 2009. According to latest deal update by VCC Edge, the deal value rose to $19,198 million in the first quarter of 2010, up from $5,195 million in Q1 of 2009 while the number of domestic deals doubled from 39 (worth $2,270 million) in Q1 2009 to 80 (worth $4,069 million) in Q1 2010.

In terms of volume, the number of outbound deals more than doubled from 24 in the year-ago period to 51 in Q1 2010 while in terms of value, the rise was more than seven times, primarily due to the Bharti-Zain deal. The number of inbound deals increased to 29 in Q1 2010 from 24 deals a year ago. Telecommunication services, energy and healthcare were the most targeted sectors with deals worth $14,036 million, $1,172 million and $961 million, respectively, in the latest quarter.

For the quarter ended March 2010, total announced deal value stood at $1,943 million, a jump of more than 185% from $675 million in Q1 2009. Total deal count in Q1 2010 also increased by 35% to 88 deals, up from 65 in Q1 2009. Interestingly, despite the enormous growth in deal value on a quarter-on-quarter basis, the deal count decreased by 11% to 88, down from 99 in Q4 2009, said the update.

Total number of venture capital investments announced in Q1 2010 stood at 17 with an announced value of $117 million as against 23 deals ($88 million) in Q1 2009. Utilities, consumer discretionary and financials were the most targeted sectors for investment with deals worth $484 million,$440 million and $403 million, respectively, in Q1 2010. Together, they accounted for more than 68% of total private equity deal value during the quarter.

According to the update, the major private equity deals were investments in Star Health & Allied Insurance, Coastal Projects Pvt Ltd, Tikona Digital Networks Pvt Ltd, Coffee Day Resorts and Hotels Ltd and Asian Genco Pte Ltd. Other sectors, which have significantly contributed to private equity deal value in Q1 2010, are information technology and industrials accounting for 14% of total deal value. The most active sectors in terms of deal volume was financials with 23 deals in the quarter, followed by IT and consumer discretionary with 19 and 17 deals, respectively.

Other sectors contributing to the deal volume were industrials and utilities accounting for 7 and 5 deals each. The oil and gas exploration and production sub-industry led this sector with two deals in Q1 2010.