GLOBAL PRIVATE EQUITY FIRMS INVEST RECORD $3.8B IN 8 MONTHS

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GLOBAL private equity (PE) firms, including Blackstone and Carlyle Group, have made an investment of $3.8 billion in 2007 so far in the country, up 50% from the year ago period. The record volume has been reached through 81 M&A deals. Last year, foreign PE players had invested $2.6 billion, data complied by global consulting firm Dealogic showed.

Carlyle Group is the leading “financial sponsor” in India with investment of $777 million via two deals, including acquisition of over 6% stake in HDFC. It is followed by Dubai International Capital, which acquired a 2.87% stake in ICICI Bank for $741 million, and Blackstone Group with $619 million inflow via eight deals. Financial sponsor is a term commonly used to refer to PE investment firms, particularly those engaged in leveraged buyout transactions. Blackstone Group, the world’s leading PE firm, has acquired stake in companies such as Intelenet Global Services, Punj Lloyd and Gokaldas Exports.

The US-based Group has also decided to pump in $150 million to acquire a stake in Nagarjuna Construction Company. A move that comes close on the heels of its decision to acquire up to 70.1% stake in Gokaldas Exports, the country’s biggest apparel exporter, for about Rs 675 crore. Blackstone Group manages around $90 billion of assets worldwide. In January, it invested about $275 million in Ushodaya Enterprises Ltd (UEL), a media and film production company owned by Ramoji Rao.

Buyouts by PE players accounted for 8% of total M&A activity in India during the year so far, down 4% from the year-ago period. This activity accounts for 16% of total Asia Pacific Financial Sponsor M&A buyout volume in 2007 year to date, up 4% compared to the year ago period. Besides, the average deal size has increased 54% to $60 million this year and the volume accounts for 16% of total Asia Pacific Financial Sponsor M&A buyout volume in 2007 so far, the Dealogic data showed. Finance is the leading industry for PE activity in India and has attracted $2 billion investments via 11 deals this year, followed by construction with $418 million through nine deals and textiles with $309 million dollars in seven deals.

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