The plight of the private equity (PE) industry in the country continues, despite claims that it is bouncing back slowly. PE investment in the country dipped to $210 million in 15 deals in March 2009, against $1.3 billion in 22 deals in March 2008.
PE players had invested $291 million in 18 deals in February 2009.
The average deal size has also hit a low, compared to year-ago levels. While it was $62 million in March 2008, it dipped to $16 million in March 2009. Deal size remained flat when compared to February 2009 levels.
According to the latest analysis by JM Financial, the total amount invested year-to-date March 2009 was $553 million in 44 deals. Incidentally, 23 deals were announced in February 2008, with an investment of $1.8 billion.
While sectors like infrastructure, retail and healthcare witnessed the highest activity last February, power, telecom and IT/ ITES sectors scored in terms of deal values in March 2009. The three sectors accounted for 38%, 29% and 14% of total PE investments, respectively.
Major PE investments in March included $70 million by IDFC Project Equity in Essar Power; $48 million by Goldman Sachs, Indivision and Oak India Investments in Tikona Digital Networks; $25 million by Baring Private Equity India in Mphasis through market purchase; and $15 million by IFC in Jain Irrigation.
Around 70% of the PE investments in March 2009 were made unlisted companies, compared to 89% in March 2008.
Meanwhile, general partners in India are facing a turbulent time as far as fund raising is concerned. Though a majority of them had announced funds of above $1 billion, they have been forced to cut it down, as they couldn?t even make the first closure of funds.
As per a report by global research firm Preqin, global private equity fund-raising hit a low of $45.9 billion in the first three months of the calendar year 2009, with only 71 funds having achieved a final closure, the smallest amount since 2003.
In the fourth quarter of 2003, PE firms had raised $34 billion, with 131 funds achieving final closure. In Q1 2009, a total of 17 funds focusing on Asia and the rest of the world raised an aggregate $2.7 billion.
Preqin projected an optimistic outlook for the second quarter of 2009; it expects institutional investors, who were holding back new investments, to return.
