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Q3 2012

Private equity
roundup — India

Private equity roundup is a quarterly
newsletter on trends and perspectives
related to private equity (PE) activity
in India.
In this issue:

Overview......................................... 2
Transactions.................................... 3
Fund focus ...................................... 5
PE-backed IPOs................................ 5
PE exits (excluding IPOs) .................. 6
Tax and regulatory update................ 7
Outlook ........................................... 9
Methodology ................................. 10

An otherwise sedate quarter sees bright spots in one
megadeal and pro-investor government reforms
Private equity (PE) deal activity in the third quarter of 2012 increased by 58% compared with Q2 2012. PE investments totaled US$2.62b, showing a marked improvement over the previous quarter (US$1.66b) and Q3 2011 (US$1.92b). However, much of the increase was due to Bain Capital acquiring a 30% stake in Genpact for approximately US$1b from its existing PE shareholders (General Atlantic and Oak Hill Capital Partners). Excluding this, activity remained almost flat.

Fund-raising slowed down during the quarter with only US$400m raised, reflecting the challenging fund-raising environment for Indian PE fund managers. In contrast, emerging markets such as China and Brazil witnessed successful fund-raising of US$6.6b and US$5.2b, respectively, in Q3 2012.

Exit activity remained flat with similar numbers of non-IPO exits (23) as Q2 2012 (23). There were no PE-backed IPOs.
There were a significant number of Government reforms to encourage economic recovery and convey a positive message to investors. In a move toward regaining investor confidence, the new Finance Minister formed Expert Committees to review the GAAR provisions and the retrospective amendments from the investors’ perspective. While it may be too early to analyze the overall impact of these reforms, the investor community has appreciated the efforts to put the Indian economy back on a path to growth.

Overview

123

101

94

120
100

2,621
1,664

1,957

80

1,771

2,517

1,646

2,221

1,946

2,617

115

60
40
20

Deal value

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Q3 2011

Q1 2011

Q4 2010

Q3 2010

0
Q2 2010

Q3 2009

0

44

Q1 2010

1,000

94

73

Q4 2009 1,070

2,000

96

Q2 2011

3,000

95

1,924

86

140
116

3,458

4,000

122
108

Number of deals

5,000

928

Q3 2012 saw 115 deals, compared with 101 deals in previous
quarter. However, Bain Capital’s US$1b secondary purchase of Genpact shares helped boost total deal value by 58% compared with Q2 2012. Excluding this deal, the aggregate deal value in Q3 2012 remained flat.

Figure 1. Trend in PE investments

Deal value (US$m)

Excluding the one megadeal, activity remained
moderate

Number of deals

Sources: VCCEdge, Asian Venture Capital Journal (AVCJ) and Ernst & Young research Note: Deal value considers deals where values have been disclosed, while the deal volumes consider all the deals announced in respective quarters.

Figure 2. Top 10 PE deals (by value) announced in Q3 2012
Month

Target

Investor(s)

Value (US$m)

August 2012

Genpact Ltd.

Bain Capital

1,000

July 2012

Embassy Property Developments

Blackstone Group

230

Real estate, hospitality and construction

August 2012

Ashoka Concessions Ltd.

Macquarie-SBI Infrastructure Fund

150

Infrastructure

August 2012

Prometheon Holdings UK Ltd. (Cox & Kings)

Citi Venture Capital International

138

Travel

August 2012

SIS India Ltd.

CX Advisors

91

Professional services

September 2012

Jain Irrigation Systems Ltd.

International Finance Corp., Mount Kellett Capital Partners

72

Industrial products

August 2012

Nova Medical Centers Pvt. Ltd.

Goldman Sachs, New Enterprise...
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