Annual Deal Roundup 2009

8/14/2019 Annual Deal Roundup 2009

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A RESEARCH PUBLICATION |December2009

ANNUALDEALROUNDUP,

and Mergers & Acquisitions in India in the year gone by


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Pa eNumber

Executive Summary 1

The Year 2009 2

Private Equity

IntroductionDeal Breakdown

35

Regional BreakdownTop 10 Private Equity DealsPrivate Equity Exits

789

M&A

IntroductionDeal BreakdownSectoral Breakdown

101213

eg ona rea ownTop 10 M&A Deals 15


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EXECUTIVE SUMMARY

The deal economy worldwide had suffered in the last two years since the global economy went

through one of its worst crises since the Great Depression of 1929. The legendary financialinstitutions like Lehman Brothers collapsed while several other financial behemoths had to be saved

from going into bankruptcy. Naturally, there was less money available to do deals and corporates cut

down on ex ansion both or anicall and inor anicall . The effect was showin on in India too even

though the economy showed signs of revival in the latter part of the year.

VCCEdge puts the Indian dealscape in context by bringing to you the data on Indian M&A, private

equity and venture capital for the last five years in this Annual Deal Roundup. The total private equity

nves men n n a e more an rom . on n o . on n . s or ,

the deal value plummeted to $10 billion in 2009 from $25 billion in 2008.

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THE YEAR2009Value Wise Deal Summary ($mn)

total announced value of $ 26.98 billion compared to

948 deals worth $52.33 billion in the year 2008 and 858

deals with an announced value of $88.65 billion in

2007.

40,000

60,000

80,000

100,000

ealValue

.

in 2007 and $9.72 billion in 2008 to $4.63 billion this

year.

The value of outbound deals was $13.19 billion in

2009 com ared to 26.8 billion in 2007 and 9.94

M&A

PE

Total0

20,000

20052006

2007

billion in 2008.

The year 2009 saw a surge of domestic M&A activity.

The value of domestic deals disclosed has increasedfrom 2.8 billion in and 5.4 billion in 2007 and 2008

2009

1000

Volume Wise Deal Summary ($mn)

(Source:VCCEdge)

respectively to $ 6.02 billion in 2009, even though the

volume of domestic deals has decreased from 207

deals in 2008 to 187 in 2009.

500

600

700

800

PE

DomesticalVolume

.

billion as against 502 amounting to $ 11.9 billion in2008.

The total value and volume of PE deals reduced by

50% and 40% respectively compared to 2008 which100

200

300

400 Outbound

Inbound

De

can be attributed to the impact of the global credit

crisis.

0

2005 2006 2007 2008 2009

(Source:VCCEdge)

2


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INTRODUCTION

PRIVATE EQUITY

Private equity has experienced a phenomenal growth over the

last two decades as institutional investors, seeking higher

returns, embraced this alternative to traditional asset classes.

The last few years leading into the current financial crisis was a

boom period for private equity in terms of the size and number

In the year shrouded by an aura of uncertainty, India witnessed

287 deals in 2009 at a disclosed value of $4.43 billion compared

to 502 deals with a total disclosed value of $11.98 billion in the

year 2008 and 488 deals with an announced value of $15.61

billion in 2007.of deals, driven primarily by buoyant credit markets that have

since squandered.

Highestquarterlyvolumeof

25025,000

Sensex breaksinto21000

levelssupportedbyhigh

marketconfidenceof

increasedFII

investment

&

strongcorporateresults.

worthmorethan$5billion

The30shareBSEindexwasdown

2.64percent,

after

having

fallen

as

muchas2.81percentatopento

100

150

10,000

15,000

,

Sensex closesabove

10,000pointson

7th February2006.

s owes eve s nce une

Sensex

DealVolu

0

50

0

5,000

Privateequity

Investment

activityhassloweddown.

Severaldealscalledoffdue

toimpropervaluations.

me

(Source:VCCEdge)

2005 2006 2007 2008 2009

Sensex DealVolume 3


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Some of the large private equity deals in 2009 included KKR and

CPP Investment Boards $255 million investment in Aricent Inc. ,Siva Ventures Ltd. acquisition of 51% stake in S Tel Ltd. for $230

million and TPG Capitals $200 million investment in Mumbai

based Indiabulls Real Estate.

With respect to high value deals there were 14 and 9 deals over The road ahead will see reduced valuations and more deals.

to 30 and 25 deals of over $50 million and $100 million

respectively in 2008. According to investors, the deal ticket sizeis likely to go down further. Average deal size was $20 million in

2009, lower than the $35 million seen in 2008.

However there will be a flight to quality as competition to invest in

high quality portfolio companies increases. Funds will enhance

diligence of their proposed investments and also encourage deal

making within their existing portfolios to improve competitive

dynamics.

$5,581

$5,049 $5,065195

200

250

5000

6000

DealVolu

alValue($mn)

$2,636

1 371$1,678

$2,524 $2,459 $2,570

$3,221

1 35166 61

113

92

73

9786

102

140

104

127

7665 62 68

93100

150

2000

3000

4000

me

D

e

$379 $353$717 $655

, $1,132

$668 $1,334 $1,13541 43

0

50

0

1000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

(Source:VCCEdge)

2005 2006 2007 2008 2009

DealValue DealVolume 4


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DEALBREAKDOWN

With the global private equity markets shrinking, investors

Exhibit 1: Private Equity Breakdown

381

450

ave urne away rom ange an ven ure cap a ea s n

general and India is no exception.

Early stage business, are also struggling in India, despite the

general robustness of the economy.

DealVolume

174

283

196200

250

300

350

VC investments in India have halved from 117 deals at an

announced value of $0.66 billion in 2008 to 80 deals at a

value of $0.31 billion in 2009. 4 16 18 17 1133

76 89 80

0

50

100

2005 2006 2007 2008 2009

Angel/Seed

VCPE

120140

160

180

2005 2006 2007 2008 2009

$2.1bn $6.8bn $15.6bn $11.9bn $4.4bn

20.12009$million

Poly.($million)

x : um er o ea s across ea s ze

Exhibit 3:Average deal size in ($million)

lume

(Source:VCCEdge)

20

40

60

80

100

26.66

47.07

34.95

2006

2007

2008DealV

0

Undisclosed 0to5 5to10 10to15 15to25 25to50 50to100 100+

With respect to high value deals there were 14 and 9 deals over $50 million and

13.93

0 20 40 60

2005

(Source:VCCEdge)

(Source:VCCEdge)

and $100 million respectively in 2008Accor ing to investors, t e private equity ea

ticket size is likely to go down further. Average

deal size was $20 million in 2009, lower than the

$35 million in 2008.5


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RealTelecom,$336The major PE investments influencing the deal values of these

sectors were investments in Aricent Inc., Indiabulls Real Estate

SECTORAL BREAKDOWN

,Logistics, 354 Ltd., Mohtisham Estates and IndBarath Power Infra Pvt. Ltd. The

other sectors, which have significantly contributed to private

equity deal value in the year 2009, are Logistics and Telecom

accounting for 15% of total deal value.

IT/IT

Services,$621Energy,$538

IT/ITServices,47

RealEstate,20

DigitalMedia,19

Real estate, IT/IT Services and Energy were the most targeted sectors

for investment with deals worth $0.65 billion, $0.62 billion and $0.54billion res ectivel . To ether, the accounted for more than 40% of

Exhibit 4: Top 5 Sectors by Deal Value for the year 2009 ($mn)(Source:VCCEdge)

total private equity deal value during the period.

Manufacturing,34Banking,Finance

&Insurance,32

Sector Volume DealValue($mn) AverageDealSize

RealEstate 20 657 43.8

Exhibit 6: Top 5 Sectors by Deal Volume for the year 2009

Exhibit 5: Sector Summary

(Source:VCCEdge)

The most active sectors in terms of deal volume were IT/IT Servicesand Manufacturing which lead with 17% and 11% of deal volume

respectively in 2009. Other sectors contributing significantly to

deal volume were Banking, Finance and Insurance and Real estate

accounting for 11% and 7% of deal volumes respectively. As seen in

IT/ITservices 47 621 15.9

Energy 16 538 41.4

Logistics 15 354 23.6

Telecom 5 336 84

the year 2008, 2009 too saw large number of deals in IT/IT

Services, Manufacturing, Banking, Finance and Insurance and Real

estate.

,

Insurance 32 244 8.4

Manufacturing 34 242 9.3

(Source:VCCEdge)

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A detailed analysis on the existing and developing

REGIONALBREAKDOWN DELHI(MetroCity Fastindustrial&economic

growth;Severalautocomponents

DehradunLudhiana

Amritsar

Jalandhar

n ras ruc ure, manu ac ur ng c us ers anconsumer markets has brought to fore keylocations that have witnessed increased PrivateEquity investments.

manufacturers,generalmanufacturing

clusters)

Exhibit 7 : Top 5 states according to dealvalue

Exhibit 8 : Top 5 cities according to dealvalue

JaipurLucknowKanpur

City Vo ume Va ue mn

Delhi 23 840

Mumbai 66 693

States Volume Value($mn)

Delhi 23 840

Indore

Ahmedabad Bhopal

Surat

Baroda

Hyderabad 23 547

Bangalore 47 486

Karnataka 51 666

AndhraPradesh 31 594

HyderabadPuneVizag

MumbaiC ennai 19 423

TamilNadu 23 459

(Source:VCCEdge)(Source:VCCEdge)

HYDERABAD

(IT/ITESandpharmaceuticalshub)

Mangalore

Mysore

TierII

Bangalore ChennaiTierI

MUMBAI(FinancialcapitalofIndia;Fastindustrial&economicgrowth;preferreddestination

forcompanies)

BANGALORE(IThubofIndia;Garmentsandtextile

clusters&emergingbiotechnology

industry)

CHENNAI

(Metrocity;IT&manufacturinghub

andhealthcare

industries)

CHENNAI

(Metrocity;IT&manufacturinghub

andhealthcare

industries)

Coimbatore

Cochin7


10/18

Exhibit 9 : Top private equity deals in 2009S.NO. Industry Target Buyer Price($million)

1 IT/ITServices AricentInc. KohlbergKravisRoberts&Co. 255

2 Telecom STelLtd. SivaVenturesLtd. 230

3 RealEstate Indiabulls RealEstateLtd. TPGCapitalInc. 200

4 LogisticsKrishnapatnam PortCo.Ltd. 3iIndiaInfrastructureFund 161

5 Realestate Mohtisham

Estates Oman

Investment

Fund 125

KaruturiGlobalLtd. EmergingIndiaFocusFunds,IndiaFocus

CardinalFund,Elara IndiaOpportunitiesFund,

124

.

7 Hospitality&Travel

CapricornHospitalityServices

Pvt.Ltd.

NewSilkRoutePartners 124

8 Healthcare&Services MaxIndia GoldmanSachs 115

9 RealestateCentury

Real

Estate,

Seven

Star

HotelPro ectGoldman

Sachs

Whitehall

Real

Estate

Fund 104

Top10PrivateEquityDeals

10 Energy

IndBarath PowerInfraPvt.Ltd. BessemerVenturePartnersIndia,CitiVenture

CapitalInternational,SequoiaCapitalIndia

100

(Source:VCCEdge)

The top 10 private equity deals accounted for

more than 36% of total private equity deals in

2009. In 2008, top 10 deals accounted for about

The largest deal by value was KKRs $255 million buyout of Aricent,

followed by Siva Ventures investment in S Tel Ltd. and TPGs $200 million

investment in Indiabulls Real Estate.

.op ea s occurre across var ous sec ors, w o e op ea s n

Real Estate.

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S.No. Target Seller Type Price($mn)

1 DLFAssetsPvt.Ltd. DEShawCompositeInvestments(Mauritius)Ltd. Buyback 470

TemasekHoldingsPte.Ltd.,GICSpecial

Exhibit 10 : Top Private Equity Exits in 2009

2 ICICIBankLtd. InvestmentsPteLtd. OpenMarket 460

3 ShriramTransportFinanceCo.Ltd. ChrysCapitalIIILLC OpenMarket 221

4 XCELTelecomPvt.Ltd. Q InvestmentsLP M&A 150

5 CognizantTechnologySolutionsCorp. SequoiaCapitalIndia OpenMarket 60

GalleonSpecialOpportunitiesMasterFundSPC

e we ss ap a . . pen ar e .

7 IndiaInfoline

Ltd.

OrientGlobalTamarindFundPteLtd,OrientGlobal

CinnamonCapital

Ltd. Open

Market 51.9

8 MaxIndiaLtd. WarburgPincusIndiaPvt.Ltd. OpenMarket 50.5

9 FinancialSoftware&SystemsPvt.Ltd. CarlyleAsiaVenturePartnersI SecondarySales 51

10 MindTree Ltd.

PrivateEquityFundLP. OpenMarket 47

Buyback,5IPO,1Private

Equity

Exits

Breakdown

(Source:VCCEdge)

M&A,18

, saw ex ts compare to n not

including the PE stake sale in Centurion Bank of

Punjab to HDFC Bank). Total exit value rose to $2.2

billion in 2009 compared to $0.93 billion in in

2008.

Funds utilized the sharp rise in the stock marketsto cash out and return some money to LPs. There

were 66 open market exits and only one IPO exit

the part sale of Warburg Pincus stake in DB Corp.

OpenMarket,66

Exhibit 11: Private Equity Exits in 2009

(Source:VCCEdge)9


12/18

INTRODUCTION

India, over the last few years, witnessed heightened deal

MERGERS ANDACQUISITION

17% and 18.5% respectively to the overall GDP, which grew at 6.7% in

activity on the back of a fast growing Indian economy. During

this time, the economy grew at an average of 8.8%. Although,

India has not been immune to the recent economic slowdown,

the countrys growing middle class and lack of dependence on

exports have helped it better weather the financial crisis than

. ource :

In the year shrouded by an aura of uncertainty, the markets have

seen downward and upward movements with Sensex losing over 50%

of its value in mid 2008, after having enjoyed an average annual gain

greater than 40% for the last three years. Since then the public.

The highlight of this growth has been the service sector, whichcontributed approximately 86% of the growth in GDP in FY

2009. Services, Agriculture and Industry contributed 64.5%,

mar ets ave re oun e w t t e n ex tra ng a ove , n

Dec09, exhibiting improving investor confidence, narrowing spreads

and reduced volatility.

The30shareBSEindexwasdown

Sensex breaksinto21000

levelssupportedbyhigh

marketconfidenceof

increasedFII

investment

&

strongcorporateresults.

. ,

muchas2.81percentatopento

itslowestlevelsinceJune2006

M&Adealvalueclocksupto

$8.7billionfor136dealsin

thequarter.

140

16025,000

Sensex closesabove

10,000pointson

7th February2006.

80

100

120

10,000

15,000

,

0

20

40

0

5,000


2005 2006 2007 2008 2009

Sensex DealVolume

10


13/18

Despite the global slowdown, the year 2009 has seen some

Indiawitnessed

371

deals

in

2009

at

adisclosed

value

of

$12.52

billion

s gn can ea s n n a. ver e pas ew years, n a as

shown resilience by not only being an important destination for

M&As but also by being active in acquiring international

companies. The year presented both challenges and

opportunities for Indian corporates and investors active in the

M&A market.The year ahead will offer significant deal making opportunities to

comparedto446dealswithatotaldisclosedvalueof$25.16billionin

theyear2008and380dealswithanannouncedvalueof$43.4billion

in2007.

In the current scenario, there will be more encouragement forconsolidation and profitability than for improving scale

operations.

compan es t at nnovate, conso ate an eve op n c e nanc ng

and non cash structures. There will be an increase in value and

volume of Indian M&A activity as investors confidence and liquidityreturn to the market. Corporates and investors will return to secure

a share of growth in the recovering markets.

$20,424

$16,76397 97

107

136

10499

103 110 120

140

160

20000

25000

$12,501

$8,722

$10,755

3843

64 6770

84 103 83 7781

60

80

100

10000

15000

alValue($mn) D

ealVolume

$679 $482

$2,468$2,741$2,303$3,684

$2,039

$4,486

$1,771$2,367$3,314

$1,444

$4,215$3,655$3,206

0

20

0

5000


D

e

2005 2006 2007 2008 2009

DealValue Deal

Volume

11


14/18

DEALBREAKDOWN

The number of domestic deals declined slightly from 191 and

Exhibit 11: M&A Breakdown

207

250

n respec ve y o n . e va ue odomestic deals was $6 billion in 2009 compared to $5.48

billion in 2008.

In terms of volume, the number of outbound deals dropped

drastically from 170 in 2008 to 90 in 2009., while in terms ofDealVolume

89

138

115

170

9075

103

191 187

100

150

200

Inbound

Outbound

Domesticva ue t e a was near y .

However, there was an increase in the number of inbounddeals from 69 in 2008 to 89 in 2009 but at lower value.28

61 64

0

50

2005 2006 2007 2008 2009

Exhibit 12:Average deal size in ($ million)

(Source:VCCEdge)

Exhibit 13:M&A breakdown deal size in ($ million) in 2009

116.6

61.3

2006

2005

AveragedealSize

, ,Domestic,$6,021

69.2

124.5

.

2009

2008

Poly.(Averagedeal

Size)

0.0 50.0 100.0 150.0 200.0 250.0

Outbound,$1,839

(Source:VCCEdge)(Source:

VCCEdge)

12


15/18

Some of the major deals influencing deal values were

transactions in Reliance Petroleum Ltd., Shantha

SECTORAL BREAKDOWN

PharmaceuticalsBanking,Finance

& Insurance 721 o ec n cs, a n ra a yam enera o ors n a v . ..The other sectors, which have significantly contributed to the

deal value in the year 2009, are Banking, finance & Insurance

and Media & Entertainment accounting for 8% of the total deal

value.

Energy,$3,613IT/IT

Services,$1,142

esearc ,

Media&

Telecom,$1,663Manufacturing,$

1,615

,76Energy,26

Entertainment,20

Energy, Telecom and Manufacturing were the most targeted sectors

for M&As with deals worth $3.61 billion, $1.66 billion and $1.61billion res ectivel . To ether, the accounted for more than 55% of

Exhibit 14: Top 5 Sectors by M&A Deal Value ($mn) for the year 2009(Source:VCCEdge)

total M&A deal value during the period.

Exhibit 16: Top 5 Sectors by M&A Deal Volume for the year 2009

Exhibit 15: Sector Summary

(Source:VCCEdge)

IT/ITES,50Banking,Finance

&Insurance,36

Sector Volume Value($mn) AveragedealValue

The most active sectors in terms of deal volume wereManufacturing and IT/IT Services and which lead with 20% and

13% of deal volume respectively in 2009. Other sectors

contributing significantly to deal volumes were Banking, Finance

and Insurance and Energy accounting for 9% and 7% of deal

Energy 26 3,613 212.5

Telecom 20 1,663 138.6

Manufacturing 76 1,615 43.65

IT/ITServices 50 1,142 47.58

Pharmaceuticals&

volumes respectively. As seen in the year 2008, 2009 too saw large

number of deals in IT/IT Services, Manufacturing & Banking.

(Source:VCCEdge)

esearc .

Banking,Finance&

Insurance 36 721 31.3

Media&

Entertainment 20 325 29.55

13


16/18

REGIONALBREAKDOWN DELHI(MetroCity Fastindustrial&economic

growth;Severalautocomponents

DehradunLudhiana

Amritsar

Jalandhar

,clusters)

Exhibit 17 : Top 5 states according to M&Adeal value and volume

UTTARPRADESH

(Manufacturingcentreofsports

JaipurLucknowKanpur

States Volume Value($mn)

Maharashtra 102 4715

AndhraPradesh 29 1763

goo s,s arp oo s; op es na on;

Severalautocomponents

manufacturers,general

manufacturing

clusters)

Indore

Ahmedabad Bhopal

Surat

Baroda

Delhi 21 857

Karnataka 27 744

UttarPradesh 6 486

HyderabadPuneVizag

Mumbai

(Source:VCCEdge)

ANDHRAPRADESH

(IT/ITESandpharmaceuticalshub)Mangalore

Mysore

TierII

Bangalore ChennaiTierI

MAHARASHTRA(Fastindustrial&economicgrowth;

preferreddestinationforcompanies)

KARNATAKA

(IThub;Garmentsandtextileclusters&

emergingbiotechnology

industry)

Coimbatore

Cochin14


17/18

Exhibit 18 : Top M&A deals closed in 2009

S.No. Target Buyer Seller Price

1 ReliancePetroleumLtd. RelianceIndustriesLtd. 1,667

2 Shantha Biotechnics Ltd. Sanofiaventis BioMerieux SA 625

3 Ma in raSatyam Tec Ma in raLt . 591

4 GeneralMotors

India

Pvt.

Ltd.

ShanghaiAutomotive

IndustryCorp. General

Motors

Company 500

5 REpower SystemsAG Suzlon EnergyLtd. Martifer SGPS 499

Quippo Telecom TataTeleservices

. . .

7 Unitech WirelessLtd. Telenor ASA Unitech Ltd. 475

8 Oil India Ltd.

IndianOilCorporationLtd.,

BharatPetroleumCorp.Ltd.,

HindustanPetroleum

Corp.

Ltd. The Government of India 450

(Source:VCCEdge)

9 VSDempo &CoPvt.Ltd. Sesa GoaLtd. 366

10 ReliancePetroleumLtd. RelianceIndustriesLtd. ChevronIndiaHoldings 272

The top 10 M&A deals accounted for about

47% of the total M&A deals in 2009.

The largest M&A deal in India was the Reliance PetroleumReliance

Industries merger, followed by Sanofiaventis acquistion of Shantha

Biotechnics and the Tech Mahindra buyout of Satyam .

15


18/18

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Annual Deal Roundup 2009