Private equity firms witnessed a flush of exits post general elections in the country and a consequent rise in stock market which opened up a fresh window for liquidity for PIPE investments. Although the number of PE exit transactions rose marginally, the quantum of money pulled out by the investors fell in 2014.
There have been exits worth $3.8 billion this year spread across some 221 transactions (including part-exit tranches) as against 211 transactions worth an aggregate of $4.7 billion in 2013, as per data collated by VCCedge, the data research platform of VCCircle.
Stock markets led the rush for exits with over $2.7 billion alone being pulled out by PE firms via that route across 109 deals comprising half of the transactions. Indeed, four of the top five exits were through the secondary market transactions.
More than a dozen PE-backed companies have filed for initial public offering and exits through IPOs is likely to become a strong liquidity generator in the coming year.
Secondary sale exits saw 24 deals worth $280 million. ChrysCap's part exit from Intas Pharma through a sale to Temasek was the most significant secondary deal of the year.
As against the previous year's top five which had two multi-baggers, two average exits and one with a haircut, this year all the five were exits in the positive zone. Four threw up average exits and one was a multi-bagger.
However, the year had some other super part or full exits with SAIF and Sequoia scoring around 30x by selling some of their shares in Just Dial. WestBridge part exited its under three-year-old investment in Astral Poly Technik Ltd, a manufacturer and marketer of CPVC piping and plumbing systems, with under 7x returns with estimated internal rate of return (IRR) of around 100 per cent.
In fact one trend of the year was that several PE firms pressed on the part or full exit button far sooner than the average holding period (click here for more).
Here's the listing of top exits this year.
Bain Capital part-exits Hero MotoCorp for $648 million
Private equity firm Bain Capital Partners has sold 7 per cent or over fourth-fifth of its holding in Hero MotoCorp Ltd via two secondary market share sales for approximately Rs 3,936 crore ($648 million). Coupled with its dividend earnings, Bain is estimated to have generated over 2x return in its little over three-year-old investment. The PE firm is estimated to have generated over Rs 400 crore in dividend earnings alone from its holding in Hero MotoCorp. This took its total exit value to over $700 million (including dividends), the biggest in the last two years and one of the largest ever. In 2012 Carlyle exited from HDFC pocketing $840 million. In the same year General Atlantic and Oak Hill Capital Partners had sold their stake in Genpact to Bain and GIC in a $1 billion deal. Bain's remaining stake is worth Rs 940 crore. It had co-invested with Singapore’s sovereign wealth fund GIC three years ago to bankroll the Munjal family for buying out Honda Motor from their more than two–decade-old joint venture. GIC also part exited during the year encashing around $78 million.
Goldman Sachs exits Mahindra and Mahindra for $404 million
Goldman Sachs, which backed diversified firm M&M way back in 2008 sold its entire holding of around 3 per cent in tranches pocketing over $400 million. It generated a 3x return on its six year old bet, not counting dividends. An investment entity under Goldman had invested Rs 700 crore through a preferential allotment of unsecured fully and compulsorily convertible debentures. This was one of the few deals in 2008 post global economic crisis which turned out to have worked well for the investors.
Providence part exits Idea Cellular for $234 million
Another noteworthy deal of 2014 was private equity firm Providence making its debut exit in India by selling part of its holding in Aditya Birla Group-promoted telecom service provider Idea Cellular. It sold 2.3 per cent stake for Rs 1,414 crore ($234 million) via an open market transaction. The partial exit translated into 3x returns on its eight-year-old investment which marks an internal rate of return of 15 per cent in local currency without counting the dividends. Providence had bought about 15 per cent in Idea in 2006 for around Rs 1,800 crore, which got diluted post Idea's IPO. The PE firm had also separately invested in the telecom tower firm of the group called Aditya Birla Telecom. Providence continues to hold 6.8 per cent stake in the company which is valued at around Rs 3,675 crore. Providence is also looking at a part-exit from UFO Moviez, which has just filed its documents for an IPO.
ChrysCapital sells stake in Intas Pharmaceuticals for around $160 million
Private equity firm ChrysCapital sold around two-thirds of its 16 per cent stake in drugmaker Intas Pharma for around $160 million which was bought by Singapore’s sovereign fund Temasek. This was the top secondary PE transaction and the largest PE exit in the Indian pharmaceutical industry for the year. The PE firm clocked almost 16x return on its investment over a horizon of eight years. ChrysCap had originally picked ICICI Venture’s 12.5 per cent in the company in late 2005 and later invested in the company through a fresh issue in 2012. Intas was ChrysCapital's first investment in the pharmaceutical sector. It has invested in several pharma firms since then, including Mankind, Cadila, Eris Lifesciences, Ipca Labs and most recently Torrent Pharma. Intas was initially planning an IPO to raise funds and provide part exit to ChrysCapital but once again dropped the plan and thereafter sealed the secondary PE deal which provided a part-exit to ChrysCap. It let the SEBI approval lapse. Prior to that, it filed documents in 2011 for an IPO.
General Atlantic sells stake in IndusInd Bank for $125 million
Private equity firm has sold around half of its holding in private sector lender IndusInd Bank encashing around $125 million through multiple tranches this year. The PE firm started to buy into IndusInd Bank earlier in 2011 and thereafter kept raising it eventually pushing its holding to 4.9 per cent, the maximum allowed by a single foreign investor. It is estimated to have pocketed around 2x in its under four year old investment. Its remaining stake is worth around Rs 1,000 crore.