The year 2011 has seen 454 PE deals worth $9.4 billion with both volume and value up 12 per cent as compared to 2010 (we kept tabs till Dec 10, 2011). While PE deal-making surpassed the volume and the value of entire CY2010 in the first three quarters of 2011, the momentum slipped during the fourth quarter. Incidentally, three of the five largest transactions involved funds being used for acquisition or consolidation which might reflect the increasing comfort India Inc is gaining with the PE asset class.
Bain Capital & GIC-Hero Honda: Private equity giant Bain Capital and the Government of Singapore Investment Corp-backed Hero Group’s Munjal family funded its acquisition of Honda Motors’ 26 per cent stake in its Indian joint venture. The deal saw Bain Capital and GIC investing $848 million in the promoter group firm Hero Investments Pvt Ltd (HIPL), which in turn, bought the 26 per cent stake held by the Japanese automaker in Hero Honda Motor Ltd. The transaction was hotly contested with other buyout shops in India, as it was one of the rare occasions where a big corporate house sought PE bucks. Since then, India’s largest two-wheeler manufacturer has re-branded itself as Hero MotoCorp.
Apax Partners-iGate Patni: The private equity major scored its second deal in India after more than three years by backing NASDAQ-listed iGate in the acquisition of the software services firm Patni Computer Systems. A consortium of iGate Corporation and private equity major Apax Partners picked up 63 per cent stake in Patni for $921 million, valuing the company at $1.45 billion (Rs 6,594 crore).
Apax committed $480 million investment in iGate, marking it the largest PE investment in the Indian IT/ITES space by a private equity firm after KKR’s buyout of Aricent. Apax invested $270 million through preferred stock in the first leg of the transaction with an option to invest an additional $210 million. With 83 per cent stake in Patni Computers after the open offer, iGate is now moving forward with delisting of the company and this cash may come in handy.
JPMorgan Chase-SKIL Infra: Nikhil Gandhi-promoted SKIL Infrastructure raised $400 million from a fund managed by JPMorgan Chase & Co. Backed earlier by private investment firms like PineBridge (earlier AIG’s private equity arm), SKIL Infrastructure has interests in areas like ship-building, education and defence. The private equity placement was much larger than the planned IPO of Rs 1,125 crore ($225 million at current rates). SKIL holds stakes in listed firms like Pipavav Defense and Offshore Engineering Ltd, and also in Everonn Education.
Pipavav, formerly known as Pipavav Shipyard, said last month that it was raising Rs 900 crore from an international strategic investor and roped in billionaire investor Rakesh Jhunjhunwala as a shareholder in September.
Apollo Global Management-Welspun Corp: Private equity giant Apollo Global Management invested $290 million in Welspun group’s flagship Welspun Corp Ltd, betting on a backward integration strategy. Welspun Corp manufactures line pipes ranging from inch to 100 inches, with a capacity of approximately two million metric tonnes per annum.
Apollo also committed another $60 million to Welspun Maxsteel, which is being acquired by Welspun Corp for the company to become a vertically integrated manufacturer in the oil and gas line-pipe industry. The acquisition of Welspun Maxsteel will help Welspun Corp address the global volatility in steel prices (with predictable costs increasing its competitiveness) by becoming an integrated player – from iron ore to DRI to plates-and-coils to pipes.
Goldman Sachs-ReNew Wind Power: Goldman Sachs invested $200 million in renewable energy start-up ReNew Wind Power Pvt Ltd, founded by prominent deal-maker and former Suzlon Energy COO Sumant Sinha. The deal is the biggest private investment in the renewable energy sector in India. The deal also makes Goldman, which has invested over $1.5 billion in alternative/clean energy-related companies globally, a majority shareholder in ReNew.
ReNew Wind Power has several wind projects under development including a 25 MW wind farm in Gujarat and a 60 MW wind farm in Maharashtra. It plans to expand its wind power portfolio by 200-300 MW annually and aims to hit 1 GW (gigawatt) capacity by 2015.