Exit volumes and value lost the momentum which was gained during 2010 even as most Indian private equity funds started harvesting the stages of their lifecycles. PE exit volume fell 38 per cent to 109 deals while value fell 55 per cent to $2.5 billion due to weak capital markets (we kept tabs till Dec 10, 2011). Exits hit a record in 2010 when there were 175 exit transactions worth $4.54 billion in the backdrop of robust capital markets. Incidentally, two of the largest exits came through M&A in the IT space, one of the first sectors to see significant PE action in India. The secondary market, expected to take off with one estimate putting dry powder with India-focused GPs at $20 billion, also did not see much action due to quality of assets on table and valuation mismatches. Here are the top five PE exits of 2011, according to VCCedge, the financial research arm of VCCircle.
Blackstone-Intelenet: World’s largest private equity firm Blackstone made its first exit in India with the sale of its first buyout portfolio company Intelenet. Incidentally, the PE major had set up its office in the country in 2005. In one of the biggest private equity exits from an Indian firm, Blackstone, along with other shareholders of the business process outsourcing company Intelenet, sold the firm to UK’s Serco for £385 million ($634 million or Rs 2,850 crore).
HDFC, along with Tata Consulting Services (TCS), had set up Intelenet as a 50:50 joint venture back in 2001. HDFC acquired TCS’ 50 per cent stake in Intelenet for Rs 161 crore in July 2004 and sold it a month later to Barclays for Rs 164 crore. In 2007, Blackstone bought 80 per cent stake in Intelenet for $260 million. At the time of the sale, Blackstone’s global portfolio companies accounted for a quarter of Intelenet’s revenues.
General Atlantic-Patni Computers: For General Atlantic, the exit from the software services firm Patni Computer Systems came after a decade-long wait when a consortium of iGate Corporation and private equity major Apax Partners acquired 63 per cent stake in Patni for $921 million, valuing the company at $1.45 billion (Rs 6,594 crore). The three Patni brothers, who together held 45.6 per cent stake, are also selling their stake along with the decade-old investor General Atlantic. General Atlantic realised $254 million for its 14.65 per cent stake, and has also started trimming its other investments in the IT sector like that of Infotech Enterprises Ltd.
Warburg Pincus-Kotak Mahindra Bank: Private equity major Warburg Pincus had been restructuring its India portfolio in 2011 where its largest exit came with open market stake sale in private sector lender Kotak Mahindra Bank Ltd. Warburg sold 3-4 per cent stake in the bank, making over $245 million. It currently holds less than 6 per cent in Kotak.
The PE firm first invested in Kotak Mahindra Bank back in 2004 through a mix of fresh issue and market buys. At that time, Uday Kotak-led promoter group was shedding its stake to meet RBI norms. Warburg Pincus also got RBI permission in 2005 to increase its stake in the bank up to 10 per cent.
During 2011, Warburg has completely exited DB Corp, Max Healthcare, Amtek India and Vaibhav Gems and is also making partial exit from Max India.
ChrysCapital-Idea Cellular: Private equity firm ChrysCapital sold its entire 2.7 per cent stake in telecom firm Idea Cellular for over Rs 751 crore ($170 million) through an open market sale of shares in July 2011. The deal came after telecom stocks started recovering with the tariffs moving up. Idea Cellular is the fourth largest telecom firm in the country by gross revenue and is backed by private equity giant Providence and Telekom Malaysia.
Ashish Dhawan-led ChrysCap had invested around Rs 500 crore in Idea Cellular five years ago, before the initial public offering (IPO) of the company. This was around the same time when Providence invested over $400 million in Idea Cellular in one of the biggest private equity deals in the country.
Siemens Project Ventures-BIAL: When infrastructure giant GVK Power & Infrastructure Ltd acquired 14 per cent stake in the Bangalore International Airport Ltd (BIAL) from Siemens Project Ventures GmbH for Rs 613.82 crore ($135 million), the latter made a partial exit. The deal valued BIAL at Rs 4,378 crore while GVK became the single largest shareholder. The Siemens arm, which invests in infrastructure projects worldwide, still holds 26 per cent stake in the airport. Incidentally, it had to wait three years to make the partial exit.
Siemens Project Ventures, which typically puts in $130 million-$1.3 billion in a project, has invested in 14 international power plant projects, with an overall capacity of more than 8,000 MW, as well as in three telecommunications projects, two medical centres and an airport, with a cumulative project volume of $10 billion.