INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

VC, PRIVATE EQUITY FIRMS SEAL 31 DEALS WORTH $1.6 B IN 40 DAYS

  THE venture capital and private equity scene in India is on a roll. Since the beginning of April to May 10 this year (just 40 days), the country has seen 31 deals worth $1.6 billion (Rs 7,200 crore). PE and VC firms had invested about $1.4 billion (Rs 6,300 crore) in 69 Indian companies during the first quarter of this calendar (January-March).

The investments were led by the $900-million (Rs 4,050 crore) acquisition of Flextronics International's software development unit by an affiliate of US PE firm Kohlberg Kravis Roberts & Co — the biggest leveraged buyout in India. According to Venture Intelligence India, which tracks these investments in India, other big deals in the period include JP Morgan Chase and IDFC's acquisition of a 21.6% stake in engineering and construction firm Larsen & Toubro's (L&T) infrastructure subsidiary L&T Infrastructure Development Projects (L&TIDPL) for Rs 550 crore and Vinod Khosla's Kleiner, Perkins, Caufield & Buyers buying up to 10% stake in the distillery equipment maker Praj Industries for about Rs 117.1 crore.

Arun Natarajan of Venture Intelligence India said, ``The momentum is continuing in this quarter also. The difference during the current quarter is the increased action on the engineering and construction front, which has seen over six deals.'' Besides L&T, this sector also saw ICICI Venture picking up a 3.5% equity stake in GMR Infrastructure for Rs 250 crore and Bessemer Venture Partners, a venture capital and private equity firm investing Rs 100 crore in Shriram EPC, part of the Chennaibased Shriram Group.

The number of deals in the IT sector has shrunk marginally with only 4 deals happening in the early funding stage so far, Mr Natarajan added. Geometric Software received $10 million (Rs 45 crore) from ICICI Venture. The January-March 2006 quarter had seen about 22 deals worth $558 million (Rs 2,511 crore)in the IT/ITeS space. Other sectors seeing traction were manufacturing and BFSI.

According to an official of India Venture Capital Association, private equity and venture capital firms invested about $2.3 billion (Rs.10,350 crore) in Indian companies across 147 deals during 2005.