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Private equity investment in India in May 2010 grew by nearly 200% as compared to the same period last year. Deal value was $630 million in May ‘10 as against $211 million in May ’09. Total deal count also increased by 42% to 28 deals, up from 19 in May ’09. On a month on month basis deal value in May ‘10 was substantially lower than that in Apr ‘10.
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May ’10
A RESEARCH PUBLICATION | May 2010
MONTHLY DEAL UPDATEStatistics and analysis of Private Equity, Venture Capitaland Mergers & Acquisitions in India
ContentsPage Number
I. Executive Summary 1
II. Private Equity Deal Flow - Introduction 2 - Deal Breakdown 3 - Sectoral Breakdown 5 - Deal of the Month 6 - Top 5 Private Equity Deals 7 III. Private Equity Exits 8
IV. M&A Round Up - Introduction 9 - Deal Breakdown 10 - Sectoral Breakdown 12 - Deal of the Month 13 - Top 5 M&A deals 14
COPYRIGHT © 2010 All rights reserved.
Corporate Office: Mosaic Media Ventures Pvt. Ltd.B-128, First Floor, Sector 5, Noida Uttar Pradesh, India - 201 301Tel: +91-120-4171111Email Id: [email protected]
MONTHLY REPORT
EXECUTIVE SUMMARY
VCCEdge puts the Indian dealscape in context by bringing to you a set of statistics analyzing Indian M&A, private equity and venture capital activity during May 2010.
Private Equity Total private equity investment in India went up by nearly 200% from $211 million in May ’09 to $630 million in May ‘10.
The median deal amount and the average value of private equity deals in May ‘10 increased to $8 million and $25 million respectively up from $4 million and $15 million in May ’09.
Financials, Materials & Healthcare were the most targeted sectors for investment with deals worth $212 million, $166 million and $131 million respectively in May ‘10.
There were 6 exits worth $164 million in May ’10.
Mergers & Acquisitions Deal value rose to $8,596 million in May ‘10, up from $513 million in May ‘09.
The number of domestic deals doubled from 17 in May ’09 to 35 in May ’10. The value of domestic deals was $1,100 million in May ’10 compared to $463 million in May ’09.
In terms of value, the number of outbound deals jumped many fold from $50 million in May ’09 to $3,442 million in May ’10, while in terms of volume the increase was more than 2X from 9 to 22.
The number of inbound deals increased to 7 valued at $4,039 million in May ’10 as against 2 deals witnessed in May ’09.
Healthcare, Financials & Materials were the most targeted sectors for M&A’s with deals worth $3,740 million, $2,336 million and $1,358 million respectively in May ‘10.
1
PRIVATE EQUITYINTRODUCTION
Dea
l Val
ue ($
Mn)
Deal Volum
e
(Source: VCCEdge)
Exhibit 1: Month Wise Private Equity Trend
2
Private equity investment in India in May 2010 grew by nearly 200% as compared to the same period last year. Deal value was $630 million in May ‘10 as against $211 million in May ’09. Total deal count also increased by 42% to 28 deals, up from 19 in May ’09.
On a month on month basis deal value in May ‘10 was substantially lower than that in Apr ‘10.
In the year 2010, March saw the highest deal value at $973 million. However this could not be maintained and deal activity recorded a dip at $840 million and $630 million in Apr ’10 and May ’10 respectively.
May '09 Jun '09 Jul '09 Aug '09 Sep '09 Oct '09 Nov '09 Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 May '100
200
400
600
800
1000
1200
0
5
10
15
20
25
30
35
40
$211
$614
$270$167
$747
$433 $412
$595
$455$554
$973
$840
$63019
21
27
23
24
27
37 38
33
2733
36
28
Value ($ Mn) Volume
DEAL BREAKDOWN
$118 Mn $315 Mn $1420 Mn $893 Mn $206 Mn $630 Mn
Exhibit 2: Private Equity Breakdown Exhibit 3: Median Deal Breakdown ($million)
Exhibit 4: Average deal size in ($million)
PRIVATE EQUITY
3
In May ’10, the total number of late stage deals stood at 22 at an announced value of $598 million as against 12 deals at an announced value of $195 million during the same period last year. However, May ’08 saw 19 deals amounting to $882 million. Venture capital deals remained at the same level over the last three years.
The median deal amount and the average value grew to $8 million and $25 million respectively in May ‘10.
(Source: VCCEdge)
(Source: VCCEdge)
(Source: VCCEdge)
May '05 May '06 May '07 May '08 May '09 May '100
5
10
15
20
25
30
0 0 02 1 0
24 5 6 6 6
12
23 24
19
12
22
AngelVCPE
May '05 May '06 May '07 May '08 May '09 May '100
2
4
6
8
10
12
14
16
18
7 8
16
13
4
8
May '05 May '06 May '07 May '08 May '09 May '100
10
20
30
40
50
60
70
10
20
61
38
15
25
PRIVATE EQUITYDEAL BREAKDOWNExhibit 5: Number of transactions by Deal Size
In May ‘10, Private equity deals under $50 million accounted for 78 % of total deal volume .
Exhibit 6: Total investment by Deal Size
In May ’10, Larger deals ($50 million and Above) accounted for 64 % of total capital invested.
(Source: VCCEdge)(Source: VCCEdge) 4
May '05 May '06 May '07 May '08 May '09 May '10 Undisclosed 2 10 5 3 5 3
Under $ 5 mn 3 7 2 7 10 10
$5 -$25 Mn 8 4 15 10 0 10
$25 -$50 Mn 1 4 4 4 3 2
$50 -$ 100 Mn 0 2 0 1 1 1
$100+ Mn 0 0 3 2 0 2
May '05 May '06 May '07 May '08 May '09 May '10
Under $ 5 mn 4 24 8 12 26 24
$5 -$25 Mn 82 38 192 130 0 142
$25 -$50 Mn 33 145 129 136 123 64
$50 -$ 100 Mn 0 137 0 56 60 85
$100+ Mn 0 0 1159 575 0 136
May '05
May '06
May '07
May '08
May '09
May '10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Undisclosed Under $ 5 mn $5 -$25 Mn $25 -$50 Mn$50 -$ 100 Mn $100+ Mn
May '05
May '06
May '07
May '08
May '09
May '10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Under $ 5 mn $5 -$25 Mn $25 -$50 Mn $50 -$ 100 Mn$100+ Mn
PRIVATE EQUITYSECTORAL BREAKDOWN
Exhibit 8: Sector Summary
Sector Volume Value($Mn) Average Size Materials 1 166 166 Industrials 4 37 12 Consumer Discretionary 5 62 16 Consumer Staples 1 8 8 Health care 3 131 44 Financials 9 212 27 Energy 0 0 0 Information Technology 4 13 3 Telecommunication Services 1 1 1 Utilities 0 0 0
In May ‘10, Financials, Materials & Healthcare were the most targeted sectors for investment with deals worth $212 million, $166 million and $131 million respectively. Together, they accounted for more than 80% of total private equity deal value during the month.
Exhibit 7: Top 5 Sectors by Deal Value in May ‘ 10 ($mn)
Major PE investments influencing the deal values of these sectors were investments in Avnija Properties Ltd., National Stock Exchange of India, Fortis Healthcare and Pegasus Assets Reconstruction.
Exhibit 9: Top 5 Sectors by Deal Volume for the month May ’10
The most active sector in terms of deal volume was the Financials sector with 9 deals during the month, followed by Consumer Discretionary with 5 deals. Other sectors contributing to the deal volume were Information Technology and Industrials accounting for 4 deals each.
(Source: VCCEdge)
(Source: VCCEdge)
5
Financials; $212
Materials; $166
Health care; $131
Consumer Discretionary; $62Industrials; $22
Financials; 9
Consumer Discretionary; 5
Informa-tionTechno-
logy; 4
Health care; 3
Industrials; 4
Target : Avnija Properties Ltd. Announced : May 7, 2010
Kohlberg Kravis Roberts & Co.
Industry : Construction Materials Deal Feature : -
(Source: VCCEdge)
Kohlberg Kravis Roberts & Co. (KKR) will invest $165.6 million (INR 7.5 billion) in Chennai based Avnija Properties Ltd. The company will use the proceeds for both organic/inorganic growth and de-leveraging.
Avnija Properties Ltd., a wholly owned subsidiary of Dalmia Cement (Bharat) Ltd., is a cement manufacturing company. Dalmia Cement demerged its cement business division to Avnija Properties Ltd. The company manages its 9 MTPA (million tonne per annum) cement manufacturing capacity.
JM Financial acted as financial advisor while Simpson Thacher and AZB Partners acted as legal advisors to Kohlberg Kravis Roberts & Co. Amarchand Mangaldas advised Avnija Properties Ltd. on the deal.
Buyer : Deal Value ($ mn): 165.6
PRIVATE EQUITYDEAL OF THE MONTH
6
Since 2006, KKR has invested over $1.1 billion in India in technology firm Aricent; telecom infrastructure player Bharti Infratel and Coffee Day Resorts, operator of the Café Coffee Day chain of cafes in India.
Kohlberg Kravis Roberts & Co. is a principal investment firm specializing in equity investments in acquisitions, leveraged buyouts and management buyouts in large cap companies. The firm considers investments in all industries.
PRIVATE EQUITY
The largest deal by value was KKR’s $165 million investment in Dalmia Cement’s unlisted subsidiary Avnija Properties Ltd.
This was followed by the investment made by Temasek Holdings in National Stock Exchange of India Ltd. and GIC Special Investments investment in Fortis Healthcare Ltd.
The Top 5 deals occurred across various sectors.
TOP 5 PRIVATE EQUITY DEALS
Exhibit 10: Top Private Equity deals in May ‘10
The top 5 PE deals accounted for 73% of the total private equity deal value in May ’10.
7
Sno. Target Buyer Deal Value ($ mn)
1 Avnija Properties Ltd. Kohlberg Kravis Roberts & Co. 165
2 National Stock Exchange Of India Ltd. Temasek Holdings Pte. Ltd. 150
3 Fortis Healthcare Ltd. GIC Special Investments Pte Ltd. 84
4 Craftsman Automation Pvt. Ltd. International Finance Corp. 37
5 Pegasus Assets Reconstruction Pvt. Ltd. DE Shaw Composite Investments (Mauritius) Ltd. 26
(Source: VCCEdge)
PRIVATE EQUITYPRIVATE EQUITY EXITSExhibit 11: Top Private Equity Exits in May ’ 10
The month of May ‘10 saw 6 exits worth $164 million.
8
Exhibit 12: Private Equity Exits in May ’ 10
Sno. Target Seller Exit Type Deal Value ($ mn) 1 JBF Global Pte Ltd. Citi Venture Capital International Growth Fund Buyback 60
2 Adventity Global Services Pvt. Ltd. Norwest Venture Partners, CIBC Capital Partners M&A 55
3 Mphasis Ltd. Baring India Investments Ltd. PCC Open Market 29.1
Temasek Holdings Pte. Ltd., New Vernon Private Equity Ltd., Kotak India Growth Fund I
5 JM Financial Ltd. Tiger Global Management LLC Open Market 8.31
(Source: VCCEdge)
(Source: VCCEdge)
M&A; 2
Open Market; 2
Buy Back; 1
Secondary Sale; 1
INX Media Pvt. Ltd. Secondary Sales 124
Dea
l Val
ue ($
Mn) D
eal Volume
(Source: VCCEdge)
MERGERS & ACQUISITIONINTRODUCTION
Exhibit 13: Month Wise M&A Trend
9
M&A deal value during May ‘10 stood at $8,596 million, a 16X increase over the same period last year. Deal count also witnessed an upward trend and increased by more than 124% to 65 deals, as compared to 29 deals witnessed during May ‘09.
Mar ’10 recorded the highest deal value at $14,326 million this year. Apr ’10 and May ’10 were substantially lower at $1,731 million and $8,596 million respectively.
May '09 Jun '09 Jul '09 Aug '09 Sep '09 Oct '09 Nov '09 Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 May '100
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
10
20
30
40
50
60
70
80
$513$1,160 $1,097
$609$1,310
$650
$1,774$2,787 $2,867
$2,293
$14,326
$1,731
$8,596
29
40
46
33 35
42 41
5356 54
70
52
65
Value ($ Mn) Volume
The months ahead will offer significant deal making opportunities to companies that innovate, consolidate and develop niche financing structures. There will be an increase in value and volume of Indian M&A activity as investors confidence and liquidity return to the market.
DEAL BREAKDOWN
Exhibit 14: M&A Breakdown Exhibit 15: Median Deal Breakdown ($ million)
Exhibit 16: Average deal size in ($million)
The number of domestic deals increased from 17 in May ’09 to 35 in May ’10. The value increased to $1,100 million in May ’10, up from $463 million in May ’09.
In terms of volume ,the number of outbound deals more than doubled from 9 in May ’09 to 22 in May ’10.
In May ’10, the number of inbound deals increased to 7 as against 2 deals witnessed in the same period last year.
The median deal amount increased to $34 million in May’10. Average deal value also increased to $277 million, as the top 3 deals accounted for 78% of total deal value in May ‘10.
(Source: VCCEdge)
(Source: VCCEdge)
(Source: VCCEdge)
MERGERS & ACQUISITION
10
May '05 May '06 May '07 May '08 May '09 May '100
5
10
15
20
25
30
35
40
1417
19
29
17
35
37 7
3 2
78
1317 16
9
22
Domestic Inbound Outbound
May '05 May '06 May '07 May '08 May '09 May '1005
10152025303540
4
10
17
23 25
34
May '05 May '06 May '07 May '08 May '09 May '100
50
100
150
200
250
300
3355
9269
51
277
DEAL BREAKDOWNExhibit 17: Number of transactions by Deal Size
In May ‘10, M&A deals under $50 million accounted for 60% of total deal volume.
Exhibit 18: Total investment by Deal Size
Larger deals ($50 million and above) accounted for 97% oftotal capital invested in May ’10.
(Source: VCCEdge)(Source: VCCEdge)
MERGERS & ACQUISITION
May '05 May '06 May '07 May '08 May '09 May '10 undisclosed 13 16 33 23 19 34 under $5 8 4 9 8 2 8 $5 - $25 m 2 13 5 7 3 7 $25 - $50 m 1 2 4 3 2 3 $50 - $ 100 m 1 1 1 1 2 5 $100+ 1 3 3 7 1 8
11
May '05 May '06 May '07 May '08 May '09 May '10 under $5 15 10 17 21 8 17
$5 - $25 m 39 141 84 121 46 101
$25 - $50 m 36 58 152 118 71 124
$50 - $ 100 m 80 75 65 78 116 308
$100+ 256 983 1704 1455 272 8047
May '05
May '06
May '07
May '08
May '09
May '10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Undisclosed Under $ 5 mn $5 -$25 Mn $25 -$50 Mn$50 -$ 100 Mn $100+ Mn
May '05
May '06
May '07
May '08
May '09
May '10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Under $ 5 mn $5 -$25 Mn $25 -$50 Mn $50 -$ 100 Mn$100+ Mn
SECTORAL BREAKDOWN
Exhibit 20: Sector Summary
In May ‘10, Healthcare, Financials & Materials were the most targeted sectors with deals worth $3,740 million, $2,336 million and $1,358 million respectively. Together, they accounted for more than 86% of total deal value during the month.
Exhibit 19: Top 5 Sectors by Deal Value in May ‘10 ($mn)
The major transactions influencing the deal values of these sectors were the acquisitions of Piramal's Healthcare Solutions Business, KBL European Private Bankers, Anglo American Zinc, Bank of Rajasthan and Godrej Sara Lee.
Exhibit 21: Top 5 Sectors by Deal Volume for the month May ’10
The most active sectors in terms of deal volume was Information Technology with 16 deals in the month, Consumer Discretionary with 14 deals and Materials with 8 deals.
(Source: VCCEdge)
(Source: VCCEdge)
Sector Volume Value($Mn) Average Size Energy 1 100 100 Materials 8 1358 453 Industrials 5 67 34 Consumer Discretionary 14 227 38 Consumer Staples 2 234 234 Health care 6 3740 1247 Financials 6 2336 779 Information Technology 16 234 47 Telecommunication Services 3 81 27 Utilities 4 219 219
MERGERS & ACQUISITION
12
Consumer Discretionary; 14
InformationTechnology; 16
Materials; 8
Financials; 6
Health care; 6Industrials; 5
Health Care; $3,740
Financials; $2,336
Materials; $1,358
Consumer Staples; $234Information Technology; $234
Target : Piramal's Healthcare Solutions Business Announced : May 21, 2010
Abbott Laboratories
Industry : Pharmaceuticals Deal Feature : Domestic
(Source: VCCEdge)
Buyer : Deal Value ($ mn): 3,720
DEAL OF THE MONTH
Abbott Laboratories entered into a definite agreement to acquire the healthcare solutions business (domestic formulations) of Piramal Healthcare Ltd. for a price of $3.72 billion (INR 173.74 billion). The buyer will make an upfront payment of $2.12 billion and will pay $400 million annually for the next four years. The assets to be transferred includes the company's manufacturing facilities at Baddi, Himachal Pradesh and rights to approximately 350 brands and trademarks. The division manufactures markets and sells branded pharmaceuticals in finished form. The domestic formulations business is currently conducted in India, Nepal and Sri Lanka. Luthra & Luthra, Baker & McKenzie advised Abbott Laboratories and Crawford Bayley and Stephenson Harwood advised Piramal Health care on the deal.
The deal will push Abbott to the number one slot in the Indian pharma landscape with a market share of approximately 7%. The acquirer will fund the transaction with cash on the balance sheet. Piramal will continue its drug discovery and research through Piramal Life Sciences Ltd. For a period of eight years, Piramal will not engage in generic pharmaceuticals business in India and other emerging markets.
MERGERS & ACQUISITION
13
The largest deal by value was Abbott Laboratories acquisition of the domestic formulations business of Piramal Healthcare Ltd. for a price of $3.72 billion . This was followed by Hinduja Group India Ltd. which acquired KBL European Private Bankers SA for a price of $1,673 million and Hindustan Zinc Ltd. which acquired Anglo American Zinc for approximately $1,338 million .
The Top 5 deals occurred across various sectors.
TOP 5 M&A DEALS
Exhibit 22: Top M&A deals in May ‘10
The top 5 M&A deals accounted for 88% of the total deals activity in May ’10.
14
(Source: VCCEdge)
MERGERS & ACQUISITION
Sno. Target Buyer M&A Type Deal Value ($ mn)
1 Piramal's Healthcare Solutions Business (Domestic Formulations) Abbott Laboratories Inbound 3,720
2 KBL European Private Bankers SA Hinduja Group India Ltd. Outbound 1,673
3 Anglo American Zinc Hindustan Zinc Ltd. Outbound 1,338
4 Bank of Rajasthan Ltd. ICICI Bank Ltd. Domestic 659
5 Godrej Sara Lee Ltd. Godrej Consumer Products Ltd. Domestic 234
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