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Chartbusters: Five Hot Investment Themes In 2009

04 January, 2010

Core sectors ruled the roost in attracting a lion’s share of private equity and venture capital flows in 2009. Barring IT/ITES, the remaining four sectors—realty, energy, telecom and logistics—belonged to the infrastructure category. This is in line with the thesis that niche spaces in the infrastructure story are great parking slots for private money. Read on to know the favourites among the investing class.

Real Estate: Investments in real estate gained momentum in mid-2009 when the economy turned for the better. Almost all big ticket investments in real estate happened in the last quarter of calendar year 2009. The sector eventually came out as the hottest among private equity investors with $657 million worth investments across 20 odd deals. There were PE investments of over $100-million in size in 2009 in this sector. The $200-million investment of TPG Capital in Indiabulls Real Estate Ltd was the largest while the other two big investments in real estate were $125 million in Mohitsham Estates by Oman Investment Fund and $103.8 million investment in Century Real Estate by Goldman Sachs Whitehall Real Estate Fund.

IT/IT Services: With $621 million investment across 47 deals, IT/ITES ruled at number two slot.  The deal which needs mention in this category was between Delhi-based telecom software solutions provider Aricent Inc and US-based PE fund Kohlberg Kravis Roberts & Co (KKR), which increased its stake from 62.5% to 79% in the company for $255 million. The stake sale in Aricent was part of company’s (Flextronics Software Systems) plan to improve financial flexibility, and also to sell non-core assets in an effort to shore up its balance sheet.

Energy: Private equity and venture capital investments in energy space stood third with $538 million across 16 investments. A very recent deal which led the pack was between Hyderabad-based Ind-Barath Power Infra Ltd and a clutch of PE funds such as Sequoia Capital India, Bessemer Venture Partners and Citi Venture Capital International. The funds collectively invested about $100 million in Ind-Barath, valuing the company at over Rs 2,100 crore. The sector has also seen a couple of other big deals last year like IDFC Project Equity’s $70 million investment in Essar Power and $78 million pre-IPO investment by Capital International and 3i Group in Adani Power.

Logistics: Logistics saw an investment of $354 million across 15 deals. The significant deal in this segment is the one between private equity firm 3i Group and Krishnapatnam Port Company Ltd (KPCL), a venture promoted by the Hyderabad-based Navayuga Group. 3i Group has invested $161 million for a minority stake in the company, reportedly between 15-26%, through its $1.2 billion 3i India Infrastructure Fund. Other big-ticket deals include Blackstone’s Rs 300-crore investment in Gateway Rail Freight Ltd (GRFL), the container train unit of Gateway Distriparks Ltd, and India Value Fund’s (IVF) Rs 200-crore investment in Innovative B2B Logistic Solutions.

Telecom: Telecom, though fifth as per deal size, has topped the list in terms of average deal value. The sector witnessed 5 deals with a total investment of $336 million. The significant deal in this sector has been the $230-million investment from Siva Ventures in Gurgaon-based tele major S Tel Pvt Ltd. S Tel has licences for six circles — Himachal Pradesh, Orissa, Bihar, Jharkhand, Jammu and Kashmir and Assam, and had applied for mobile licences in all 22 circles in India.

 


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Chartbusters: Five Hot Investment Themes In 2009

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