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INDIA Inc struck private equity (PE) deals worth $872 million in May, the highest since September 2008 when US investment bank Lehman Brothers went bankrupt, sinking global stock markets due to liquidity crisis and low business sentiment.

PE activity was also strong in terms of volumes with 18 deals during May, most number in a single month since November 2008, as per the latest data compiled by advisory firm Grant Thornton. The value of PE deals was hovering between $200-500 million over the last seven months.

Besides the traditional PE transactions, the data also includes funds raised from financial institutions including PE firms through qualified institutional placement (QIP). For instance, a clutch of investors including TPG Capital invested around $600 million in Indiabulls Real Estate.

Other prominent transactions last month included IFC picking 4.4% in Max India for $33 million, besides India Value Fund’s $44 million transaction for Innovative B2B Logistic Solutions.

Grant Thornton India, Partner- (Transaction support services), C G Srividya said, “Private equity investments have increased significantly compared to the previous seven to eight months. One of the reasons for this has been the improvement in sentiments driven by the stock markets.” Sensex, the benchmark stock market index, has bounced back almost 75% after seeing three year lows in March’09.

But the level of PE activity has more than halved compared to last year. The total number of PE deals during the first five months of 2009 stands at 74 transactions with an announced value of $2.19 billion as compared with 163 deals worth $6.12 billion during the corresponding period in 2008. Meanwhile, strategic merger and acquisitions (M&A) continued to flounder. The total value of strategic M&A during the month crashed to $118 million spread across 20 transactions of which 4 were group restructuring deals.

Barring February 2009, there have been M&A deals worth $400 million- $3 billion over the last seven to eight months. The data does not include the proposed Bharti Airtel-MTN transaction, which is still in works.

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