PE deals see August rush, but overall pipeline seems dry
Inbound M&A deals continue to dry up, while the IPO market remains barren as well
The Bain Capital stake purchase in Genpact for $1 billion in August has led the month to top private equity numbers for the year in terms of total deal value. Bain bought a 30 percent stake in Genpact, the largest deal in the IT and IT-enabled services space in 2012.
Grant Thornton's monthly deal report DealTracker showed the Genpact deal topping the private equity (PE) charts, and propelling the total PE deal value for August 2012 to $1.8 billion, with 38 deals in all. This is much higher compared to the $0.35 billion (28 deals) and $0.65 billion (21 deals) seen during the corresponding month in 2011 and 2010 respectively.
Raja Lahiri, Partner, Transaction Advisory Services, Grant Thornton India, a leading audit, tax and advisory firm, says "August 2012 was a fantastic month for PE. The month witnessed the highest deal value at $1.8 billion and also saw three large PE deals."
The Genpact deal enabled part exit of the existing PE investors, General Atlantic Partners and Oak Hill Partners. There were two other large PE deals: SBI Macquarie Private Equity's $150 million investment in Ashoka Concessions and Nasper and Tiger Global's $150 million investment in Flipkart.
On the mergers and acquisitions (M&A) side, there were 43 M&A deals worth $1 billion which comprised domestic deals ($ 0.6 billion) and cross-border deals and internal M&A and restructuring ($ 0.7 billion). The Lodha-DLF Mumbai land deal at $490 million was the largest M&A deal.
In all, the total M&A and PE deals in August 2012 were valued at $2.84 billion (with 81 deals) as compared to $3.64 billion (77 deals) and $2.02 billion (63 deals) in the corresponding month of 2011 and 2010 respectively.
The total value of outbound deals (Indian companies acquiring businesses outside India) in August 2012 was $ 0.04 billion (9 deals) as compared to $0.85 billion (11 deals) and $0.14 billion (15 deals) during the corresponding month in 2011 and 2010 respectively, the DealTracker report says.
On the other hand, the total value of inbound deals (foreign companies or their subsidiaries acquiring Indian businesses) in August 2012 was a much lower $0.31 billion (11 deals) as compared to $1.5 billion (11 deals) and $1.15 billion (7 deals) during the corresponding month in 2011 and 2010 respectively.
The total value of domestic deals in August 2012 was $0.60 billion (17 deals) as compared to $0.94 billion (18 deals) and $0.09 billion (15 deals) during the corresponding month in 2011 and 2010 respectively.
There were only two IPOs listed in August 2012, which raised a sum of $1.95 million from the public. The total amount raised through IPOs during the period January-December 2011 was $ 1.20 billion from 30 IPOs, the report says.
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