Indian private equity industry is currently causing headlines for all the right reasons. A new study by Venture Intelligence shows private equity and venture capital investors were able to realise over $6 billion via share sales during the first seven months of 2015. Indian private equity could well be on its way for a record year.
The Reports Findings
Venture Intelligence, a specialist company in private company financials, looked at the share sales during the period from January to July. The $6 billion private equity and venture capital investors were able to generate is nearly a third more than what investors realised in the full year in 2005 and 2010, which previously have been the best full years. During both years investors’ share sales amounted to around $4.5 billion.
The breakdown of the share sales sees private equity and venture capital investors realising more than $2 billion via strategic sale or sale of stake in the company to a larger company. This is already ahead of the $1.8 billion investors realised during the entire year in 2005, the previous record year.
The investors also made exits through the share sales or by an acquisition of another private equity firm. During the first seven months, these amounted to $1.6 billion. Once again, the start of the year has exceeded the previous record of a full year high of $1.5 billion in 2013.
Finally, investors sold shares for nearly $1.9 billion in already listed companies vie the public market. While the exits via public market sales has not yet exceeded the previous annual record, the Venture Intelligence analysts expect it could well do so this year.
The Best Sectors
The most profitable share sales took place in the IT and ITES sectors. Share sales in companies operating in the sector provided returns of $2.4 billion to investors.
Among the most notable deals in the sector was the acquisition of the IT services firm iGate by Capgemini. The private equity firm Apax Partners made an over three-time return in the $4 billion deal, bringing home $1.3 billion on its investment in 2011.
The IT and ITES sector was closely followed by the banking, financial services and insurance (BFSI) sector. Private equity and venture capital investors took home $1 billion from share sales in the sector.
It was followed by telecom, which generated $770 million in returns, and the entertainment sector with $280 million.
A Record Year in the Horizon
Overall, the Indian private equity sector is making a strong recovery and it could be ready to break records in all sorts of categories. Business World quoted Sanjiv Kaul, managing director at private equity firm ChrysCapital, saying, “Revival in economic growth and capital markets could provide a boost to exits over the next few years. The perception still remains investment activity has bottomed out but I expect deal activity to pick up going forward.”
It remains to be seen whether investments can also improve as well as gains have so far. If you want to stay on top of what happens in India, remember to follow our newsletter and check out private equity deals at DealMarket.