Recent Trends of PE Funding in India.ppt

Innovations in Management - Opportunities and Challenges National Level SymposiumMay 27 & 28, 2013 JSS Centre for Management StudiesSri Jayachamarajendra College of Engineering, JSS Technical Institution Campus, Mysore

PROF CHOWDARI PRASADTAPMI, MANIPALMAY 28, 2013Recent Trends of Private Equity Funding in India**Recent Trends in PEVC in India

Recent Trends in PEVC in India

What is Private Equity?A private Equity firm is nothing but a private group of investors, who make money through purchase and sale and ownership of private equity. As against publicly traded equities that are purchased and sold in the stock market, private equity funds deal with equities that are not available publicly. Private equity is unlike debts or loans to the company like bank loans and bonds since equities have greater potential for return and risk as compared to debt. *Recent Trends in PEVC in India*


Private Equity2Private Equity firms are companies that invest in private businesses by buying their shares and equities. These are heterogeneous organizations that differ in objectives, strategies and resources and these companies frequently invest in companies under sectors like communications, biotechnology, semiconductors, software and hardware.

*Recent Trends in PEVC in India*


Top 10 PE Firms in IndiaICICI Venture

ChrysCapital

Sequoia Capital

India Value FundKotak Private Equity Group

6. Baring Private Equity Partners7. Ascent Capital

8. CX Partners

9. Everstone Capital

10. Blackstone Capital*Recent Trends in PEVC in India*


Some more PE Funds in India UTI Ventures CVC International JM Financial Evolvence New Bridge Financial Advisors IDFC Alternative

17. Warburg Pincus18. ActisCarlyleKKR - Kohlberg, Kravis and Roberts XanderWalton Street Capital CCMP Capital Advisors



Other players in PE domainKPMGBain & CompanyPriceWaterhouse CoopersErnst & YoungGrant ThorntonMckinsey & companyDeloitteVenture IntelligenceVC CircleIVCA

GOI MoF, DEA, DFSSEBI / RBI / NSE /SIDBI / IDFC/ CBDT /FIPB / DIPPLaw Firms / Acts .Cos, Contract, Trust, IT, LLPManagement Consultants--------------------------------YoutubeCNBC TV18Bloomberg



Some recent announcements in Newspapers on PEVC FundingsET May 23 / Why P Es follow ShriramTOI 21 May /p13 Ex-execs face off to buy MphasisTOI 18 May / PE Actis ends $2bn road JV with TatasET 16 May / Tatas PE Fund eyes pie in the SkyET /Turnaround to Help Second-Run of VC funded firmsET / Blackstone eyes realty investment**Recent Trends in PEVC in India


1.ET May 23 / Why P Es follow ShriramEven in most difficult year, PE funds booked INR 520 crore in profits from exits in Shriram Group

SHRIRAM EPCChrysCapital $0.8 mnChrysCapital $22 mnBessemer $15 mnNew Vernon $4.2 mn

SHRIRAM NEEDLE BEARINGICICI Venture $0.1 mnSHRIRAM TRANSPORT FINANCEChrysCapital $30 mnChrysCapital $112.5 mnTPG Capital $307 mnSHRIRAM CITY UNION FINANCEChrysCapital, ICICI Venture $70 MNChrys Capital $36 mnICICI Venture, Norwest $17 m



2. TOI 21 May /p13 Ex-execs face off to buy Mphasis

P Es tap old & new managements to acquire controlling state from HPTAKEOVER Battle : Buyout bidsHP working with Citigroup to sell its 60% stakeIt has had talks with TPG, Advent, Carlyle and Kohlberg Kravis Roberts & CoSome of them have approached Jerry Rao to structure an acquisitionRao unlikely to play any active executive role*Recent Trends in PEVC in India*


A. VC Industry in India - ChronologyWorld Bank study GOI policy initiative lead to Guidelines for Venture Capital Funds, 1988 (CCI)Restricted to setting up of VCFs by Banks/F IsGOI Guidelines for Overseas VCs in Sept 1995CBDT Guidelines for flow of Foreign Currency governed by RBI requirementsSEBI (Venture Capital Funds) Regulations, 19961999 Union Budget speech / SEBI Committee on VC set up in July 1999 / KB Chandrasekhar2000



VC Industry in India2Advisory Committee on VC Dr Ashok Lahiri, as Chairman Report to SEBI in 200314 Members GOI/MoF/CBDT/RBI/E&Y/IVCA/ IIM-L/SIDBI VC Ltd/ UTI VF / ICICI VFM / IL&FS Investment Managers / Kotak Mahindra VC / Chartered Accountant / SEBI Representative Covered : Amendments / Operational issues / VCF and FVCI / VCFs / Tax related issues / Foreign Exchange controls / Regulation of VC / Size of VC industry / International scenario*Recent Trends in PEVC in India*


B. Phased Development in IndiaPhase I : Formation of TDICI in 80s and regional funds : GVFL / Andhra Pradesh IDC in 1990s

Phase II : Entry of Foreign VCFs in 1995-1999

Phase III : Emergence of successful India-centric Venture Capital firms : 2000 onwards

Phase IV : Increasing appetite of investing in India by US VC and PE companies around 2003



PE Funding 1990-2005 Globally**Recent Trends in PEVC in India


PE Funding in India : 2000 - 2006**Recent Trends in PEVC in India


Growth of VC/PE in India

WGFI Report dated July 30, 2010PE = Permanent Establishment? Prussia, 1845!*Recent Trends in PEVC in India*


Working Group on Foreign Investment : GOI : MoF/DEA : Report dated July 30, 2010Shri UK Sinha, CMD UTI AMC ChairmanDr KP Krishnan, Secy, PMs Econ. Advisory CouncilShri Ashutosh Dikshit, Jt Secy, Tax Policy., DoRShri Govind Mohan, Jt Secy, Infr & Investment, DEAShri KN Vaidyanathan, Executive Director, SEBIShri Madhu Kannan, MD&CEO, BSE India Ltd.,Shri Ravi Narain, MD&CEO, NSE India LtdDr Ila Patnaik, NIPFP; Dr Ajay Shah, NIPFP; and8 Other senior Govt Officials, Consultants**Recent Trends in PEVC in India


Private Equity Investment in India (Source: NSE and Business Standard)*Recent Trends in PEVC in India*


The Global VC and PE Country Attractiveness Index, 2011Second Annual Report by IESE Business School of University of Navarra in Barcelona..Sponsored by Ernst & Young (E&Y) and in cooperation with Emlyon Business School3 Authors: Prof Alexander Groh, Prof Heinrich Liechtenstein and Mr. Karsten Leiser (2 Professors and Manager)Includes 80 countries / emerging economies (66 in 2009/2010)Parameters: Economic Activity, Depth of Capital Market, Taxation, Investor Protection and Corporate Governance, Human and Social Environment, and Entrepreneurial Culture and Deal OpportunitiesIndia is at 30th rank with 61.4 while USA is no. 1 (100) and UK at no.2 with 93.3 followed by Canada, Singapore, Switzerland and China at no.20 with 72.3 Kyrgyzstan at no. 80 and index of 14.4



India : VC PE Ranking 2007/2011*Recent Trends in PEVC in India*

Parameter2007 Rank2011 Index2011 RankChangeVCPE Ranking2661.430AdverseEconomic Activity3108.92FavourableDepth of Capital Market1868.915FavourableTaxation6284.972AdverseInvestor Protection / Corporate Gov4259.646AdverseHuman / Social Environment4353.146AdverseEntrepreneurial Culture / Deal Opportunity4538.554Adverse


SEBI (AIF) Regulations, 2012 (May 21)Has Seven Chapters and Two SchedulesDefinitions including AI Fund, PE, VCF, VCUCovers: Registration of AIF, Categories I to III, Eligibility Criteria, Furnishing of Information, Procedure for grant of Certificate and refusal, Investment Strategy, Placement Memorandum, Schemes, Tenure, Listing, General Investment Conditions, SME Funds, Conditions for Categories I to III AIFs, Others, General Obligations, Conflict of Interest, Transparency, Valuation, Obligations of Manager, Submission of Reports to SEBI, Winding Up, Inspection by SEBI, Procedure of Action in case of default, Miscellaneous..& 2 Schedules include forms , fees, etc.*Recent Trends in PEVC in India*


BW May 21, 2012 : Growth in PE**Recent Trends in PEVC in India

YearPE No.PIPE No.PE (Mn $)PIPE (Mn $)PIPE@200463301,583618392005145642,259977432006245656,5141,3262020073479013,1013,306252008304649,5861,494162009170423,562639182010230467,43268092011234618,8241,57018Source: Venture Intelligence@As a % of total PE amt


The Fourth Wheel : IVCA /GT Report 2012*Recent Trends in PEVC in India*As on a recent date, in India, PE funding was to the tune of $ 63 bn, in 2,000 companies, in 8 years by about 200 PE Funds in 400 deals.

Details20122011% ChangeRemarksAmount of PE funding$ 7.4 bn$ 8.8 bn-15DecreaseNo. of Deals244234+0.4IncreaseAverage Deal Size$ 18 mn$ 23 mn-21.7Decrease- Infrastructure$ 311 mn$ 766.4 mn-59Decrease- Real Estate$ 715 mn$ 1,075.3 mn-33.4Decrease- Banking, Financial Services$ 687 mn$ 815.6 mn-15.7Decrease- IT and IT Enabled Services$ 1,867 mn$ 1,408 mn+19Increase- Pharma, Biotech & Healthcare$ 856 mn$ 261.3 mn+227Increase


VC Circle : Study May 20, 2013 What do Limited Partners want from Indian private equity fund managers: Results of an exclusive VCCircle survey of global LPs?A VCCircle survey of over a dozen foreign institutional limited partners with significant exposure to the region suggests that India remains an important market to them and the good news is that nobody is saying No to India.That said, LPs realize that India is not a beta play and they need to cherrypick fund managers based on their track record.



VC Circle Study - 2A majority also believed that the public reputation of Indian PE is bad with almost 100% of respondents agreeing that the contraction in the Indian PE industry is almost probable and necessary. As balance of power shifts to LPs, there were also some interesting responses seen on what should be the ideal management fee structure for Indian PE funds. LPs also shared their views on aspects like: do they prefer allocating capital into Indian PE spin-outs; their return experience from Indian PE; do they mean to increase or decrease their allocation to the region or the key barriers for Asian LPs as they start or consider expanding their commitment to Indian PE among others*Recent Trends in PEVC in India*


PE deals to see moderate rise: Survey Ref www.IndiaPE.comPrivate equity players expect a moderate increase in deal activity in India during 2013 with healthcare emerging as the top pick for these investors, a survey said. Expectations about deal activity in 2013 remain cautious but still positive on the whole. Our interviews suggest that deal activity will see moderate growth in 2013 throughout the industry. The steps taken towards improving Indias legislative framework have made investors a bit more upbeat , and general partners suggest that more deals will close in 2013, Bain & Co and IVCA said in the India Private Equity Report. Last year, there was a mere 4% rise in the number of deals, reflecting the cautious mood of investors in the wake of political uncertainty and concerns over the India growth story. Although the mood has improved, investors appear only marginally upbeat. Private equity funding will only grow in India if the policy framework is supportive. Policymakers need to be quick and decisive in creating new legislation, the report said. Source: Times of India



Ref : Conference Papers / Articles-1Chowdari Prasad and KS Srinivasa Rao (2006), Private Equity Funding and Venture Capital in India, presented at the International Conference on Business & Finance organised by ICFAI, Hyderabad, DecemberChowdari Prasad and KS Srinivasa Rao (2007), Private Equity Funding in India Issues and Challenges, presented at the Fifth AIMS International Conference on Management

**Recent Trends in PEVC in India


Ref : Conference Papers / Articles-23. Chowdari Prasad and Durga Prasad, M (2012), Recent Trends of Private Equity Funding in India, TAPMI, Pratibimb, monthly e-magazine4. Mahesh Nayak (2012), The Vicious Cycle : In Depth / Private Equity, Business World, May 215. Prathima IVN and Chowdari Prasad (2006), Private Equity Is it Here to Stay?, TAPMI Research Learning through Inquiry and Investigation Compendium of Research Papers through Faculty-Student Partnership, March



Ref : Conference Papers / Articles-26. Robert S Harris, Tim Jenkinson and Steven N Kaplan (2012), Private Equity Performance : What Do We Know, University of Virginia Darden School of Business

7. Sajal Singh (2006), Venture Capital Investments in The Indian Market, ABA SBL Annual Meeting Hawaii, August 06



References-Developments-12013 Private Equity Fund Outlook : In search of firm footing : Deloitte Report

2013 : International Finance Corporation, World Bank Group : The Case for Emerging Market Private Equity

Second Innings - An Industry in transition : Private Equity annual roundup 2012 India (E&Y Report)

Private Equity roundup India, Quarterly Newsletter for Quarter-1 of 2012 by Ernst & Young**Recent Trends in PEVC in India


References-Developments-25. May 21, 2012 : The Gazette of India Extraordinary, Part III, Section 4, SEBI Notification (AIF Regulations, 2012)Private Equity : Fuelling Indias Growth Deloitte IVCA Report, May 2012 7. Jan 2013 Report : The Fourth Wheel - 2012, GT and IVCA : PE in the Indian Corporate Landscape8. The Global Venture Capital and Private Equity Country Attractiveness Index 2011 annual : IESE BS, University of Navarra, E&Y, and Emlyon B-School



References-Developments-39. India Private Equity Report, 2011 Bain & Company : Indian Venture Capital & Private Equity Association10. Venture Intelligence Report : Private Equity Impact 2011 KPMG and Ascent Capital11. India : Private Equity Funds : Attracting Domestic & International LPs : January 28, 2011 : Arvind Mathur12. Report of the Working Group on Foreign Investment, 30 July 2010 : DEA, MoF, GOI, New Delhi13. Private Equity Investments in Indian Companies : June 2010 Nishith Desai Associates, Mumbai



References-Developments-414. Private Equity and Venture Capitalism : A Report on India and China (2008) : Zpryme R&C15. Working Paper by Mrinalini Kochulpillai (2008) The Indian Protection and Utilisation of Public Funded Intellectual Property Bill, 2008 : Is the Indian Innovation System Ready: Part III16. Foreign Investments in India : Report of Expert Group on Encouraging FII flows and checking the vulnerability of Capital Markets to speculative flows, November, 2005



Some Websiteswww.altassets.netwww.asiaventure.comwww.economywatch.comwww.evalueserve.comwww.ey.comwww.gt-india.comwww.ibef.orgwww.iciciventure.comwww.indiape.comwww.idfc.com

www.indiavca.orgwww.nasscom.orgwww.nseindia.comwww.pwcglobal.comwww.tie.orgwww.vccircle.comwww.vcindia.comwww.ventureintelligence.inwww.venturewoods.comwww.wikipedia.com



MY CONTACTS: 9482549472 OR 9242124642 OR 0820-2701045Thank you*Recent Trends in PEVC in India*


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Recent Trends of PE Funding in India.ppt