Vccedge deal update august'10

Aug ’10

A RESEARCH PUBLICATION | September 2010

MONTHLY DEAL UPDATEStatistics and analysis of Private Equity, Venture Capital

and Mergers & Acquisitions in India

Contents

Page Number

I. Executive Summary 1

II. Private Equity Deal Flow

- Introduction 2

- Deal Breakdown 3

- Sectoral Breakdown 5

- Top 5 Private Equity Deals 6

- Fund Activity 7

III. Private Equity Exits 8

IV. M&A Round Up

- Introduction 9

- Deal Breakdown 10

- Sectoral Breakdown 12

- Top 5 M&A deals 13

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EXECUTIVE SUMMARY

Monthly Deal Update - August 2010

Private Equity

Total private equity investment in India grew 7.5x to $1.3 billion as against $179 million in August 2009.

The first eight months of 2010 have seen private equity deal value at $6.5 billion as compared to $4.4 billion in the whole of 2009.

The median deal amount and the average value of private equity deals in August 2010 was $7 million and $45 million respectively.

Industrials, Telecom and Financials were the most targeted sectors for investment with deals worth $309 million, $304 million and $298million respectively.

Mergers & Acquisitions

M&A value in India in August 2010 grew nearly seven fold to $4.2 billion, up from $629 million in August 2009.

The number of domestic deals increased from 20 in August 2009 to 27 in August 2010. The value of domestic deals decreased from$521 million to $364 million over the same period.

In terms of value, the number of outbound deals jumped from $60 million in August 2009 to $3.35 billion in August 2010.

Inbound deals increased to 10 valued at $442 million in August 2010 up from 8 deals worth $39 million in August 2009.

Energy, Industrials and Consumer Discretionary were the most targeted sectors for M&A’s with deals worth $3.1 billion, $325 millionand $310 million respectively.

1

179

747

438 442595

465536

977847

654

818 842

1346

24 2428

39 38

33

28

3337

2926

40

35

0

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10

15

20

25

30

35

40

45

0

200

400

600

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Aug '09 Sep '09 Oct '09 Nov '09 Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 May '10 Jun '10 Jul '10 Aug '10

Vo

lum

e

Val

ue

($m

n)

Value $mn Volume

INTRODUCTIONPRIVATE EQUITY

Exhibit 1: Monthwise Private Equity Trend

2

Private equity investment in India in August 2010 grew 7.5xas compared to the same period last year. Deal valuereached $1,346 million as against $179 million in August2009. Total deal count also increased by 45% to 35 deals, upfrom 24 in August 2009.

When compared to July, deal value in August 2010 was up60% due to some large deals during the month.

August 2009 had seen the lowest monthly deal value sincethe beginning of 2009, with the exception of March ‘09which was at $136 million.

Since then an upward trend has been witnessed with dealvalue peaking during August 2010, suggesting a recoveryfrom last years slowdown.

August 2010 has seen the highest monthly private equity dealvalue over the last thirteen months. August 2009 was the lowest.


DEAL BREAKDOWN

0

5

10

15

20

25

30

35

Aug '05 Aug '06 Aug '07 Aug '08 Aug '09 Aug '10

02 2

4

0 01

5

89

3

1314

29 29

32

2122

Angel

VC

PE

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0


0.0 0.3 2.0 2.5 0.0 0.00.2 21.9 13.764.1

8.348.0

230

451

1192 1163

171

1298

Angel

VC

PE

Exhibit 2: Private Equity Type - Volume Exhibit 3: Private Equity Type – Value ($mn)

18 16

54

32

9

45

0

10

20

30

40

50

60


Exhibit 4: Average Deal Size ($mn)

8

11

22

15

57

0

5

10

15

20

25


Exhibit 5: Median Deal Amount ($mn)

PRIVATE EQUITY

3

The average deal amount went up five fold from $9 million in Aug ‘09 to $45 million in Aug ‘10. Median deal amount went up 40% from $5 million to $7 million over the same period.


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug '05

Aug '06

Aug '07

Aug '08

Aug '09

Aug '10

$100m+

$50m-$100m

$25m-$50m

$5m-$25m

Under $5m

Undisclosed

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug '05

Aug '06

Aug '07

Aug '08

Aug '09

Aug '10

$100m+

$50m-$100m

$25m-$50m

$5m-$25m

Under $5m


Undisclosed 2 7 7 7 3 5

Under $5m 5 9 3 10 10 6

$5m - $25m 4 14 9 16 9 16

$25m - $50m 3 3 4 6 2 2

$50m - $100m 1 3 1 2 0 1

$100m+ 0 0 5 4 0 5


Under $5m 9 19 4 18 20 14

$5m - $25m 48 176 133 230 90 175

$25m - $50m 115 101 124 176 70 70

$50m - $100m 58 177 57 125 0 86

$100m+ 0 0 875 681 0 1001

DEAL BREAKDOWNPRIVATE EQUITY

Exhibit 6: Number of transactions by deal size Exhibit 7: Total investment by deal size

4

In Aug ‘10, private equity deals under $50 million accounted for 83% of total deal volume.

In Aug ‘10, private equity deals under $50 million accounted for only 19% of total deal value.


Top 5 Sectors By Value ($mn) Top 5 Sectors By Volume

SECTORAL BREAKDOWN

Industrials, $309

Telecom, $304Financials, $2

98

Utilities, $290

Healthcare, $66

Sector Volume Value($Mn) Average SizeConsumer Discretionary 5 34 11Consumer Staples 1 16 16Energy 0 0 0Financials 10 298 30Healthcare 5 66 17Industrials 7 309 52Information Technology 4 22 7Materials 1 8 8Telecommunication Services 1 304 304Utilities 1 290 290

PRIVATE EQUITY

Exhibit 8

Exhibit 10: Sector Summary – August 2010

5

Exhibit 9

Financials, 10

Industrials, 7

Healthcare, 5

Consumer Discretionary,

5

Information Technology, 4

In Aug ‘10, Industrials, Telecom and Financials were the mosttargeted sectors for investment with deals worth $309million, $304 million and $298 million respectively. Together, theyaccounted for 68% of total private equity deal value during themonth.

The most active sector in terms of deal volume was Financialswith 10 deals during the month. This was followed by Industrialswith 7 deals. Healthcare and Consumer Discretionary had 5 dealseach.


•

TOP 5 DEALSPRIVATE EQUITY

S.No. Target Buyer Deal Value ($ mn)

1 Viom Networks Ltd. Macquarie-SBI Infrastructure Fund 304

2 Moser Baer Projects Pvt. Ltd. Blackstone Advisors India Pvt. Ltd. 290

3 GMR Airports Holding Pvt. Ltd. Macquarie-SBI Infrastructure Fund 200

4Lodha Group, 117 Storey Residential Tower

in Mumbai

GIC Special Investments Pte Ltd. , Temasek Holdings Pte.Ltd., HDFC Venture Capital Ltd., Abu Dhabi Investment Council 107

5 Shriram Properties Ltd. TPG Capital Inc. 100

Exhibit 11: Top private equity investments in Aug ‘10

6

The top 5 PE deals accounted for 74% of thetotal private equity deal value in August ’10.

Two of the top three investments in August 2010 were madeby Macquarie-SBI Infrastructure Fund. It invested $304million in Viom Networks and $200 million in GMR AirportsHolding.

Other large deals in August include the $290 millioninvestment made by Blackstone Advisors in Moser BaerProjects, the $107 million investment by a consortium ofinvestors in Lodha Group’s 117 story residential tower andTPG Capital’s $100 million investment in Shriram Properties.

The investments in Viom Networks, Moser Baer Projects andGMR Airports Holding are also amongst the top ten deals of2010.


FUND ACTIVITY DURING AUGUST 2010PRIVATE EQUITY

7

On The Road

Closed – First / Final

•Clove Route Fund - Frontline Strategy Target Size - $150 million

•I-Farm Venture Advisors Target Size - $100 million

•India Buyout Fund II - Sonoma Management Partners Target Size - $100 million

•India Realty Fund 1 - Azure Capital Advisors Target Size - $106 million

•Stega Capital Fund I Target Size - $50 million

•Tata Capital Growth Fund (Tata Capital and Mizuho Securities) Target Size - $1 billion

•Indivision India Partners II - Everstone Capital Management Target Size - $550 millionFirst Close at $250 million

•Faering Capital - Aditya Parekh and Sameer Shroff Final Close - $161 million

•SIDBI Venture Capital Fund III - SIDBI Venture Capital Final Close - $214 million


M&A , 4

Buyback, 2

Open Market, 6

Secondary Sale, 4

IPO, 2

PRIVATE EQUITY EXITSPRIVATE EQUITY

Sno. Target Seller Exit Type Deal Value ($ mn)

1Venture Infotek Global Pvt. Ltd. Kubera Cross Border Fund Ltd., Walden International,

Global Internet Ventures LLC M&A 100

2 Emaar MGF Land Ltd. Citi Venture Capital International Buyback 60

3 Dr. Lal Path Labs Pvt. Ltd. Sequoia Capital India Secondary Sale 35

4 Gujarat Pipavav Port Ltd. The Infrastructure Fund of India, IDFC India

Infrastructure Fund IPO 12

5Equitas Micro Finance India Pvt.

Ltd. Aavishkaar Goodwell India Microfinance

Development Co. Ltd. Secondary Sale 9.7

Exhibit 12: Top 5 exits in Aug ‘10

8

The month of August 2010 saw 18 exits worth $249 million.


INTRODUCTIONMERGERS & ACQUISITIONS

6201,310

6501,774

2,816 2,817 2,324

14,347

2,092

8,641

14,098

5,3974,227

34 35

44 41

5459

55

72

54

67 64

42

58

0

10

20

30

40

50

60

70

80

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Aug '09 Sep '09 Oct '09 Nov '09 Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 May '10 Jun '10 Jul '10 Aug '10

Vo

lum

e

Val

ue

($m

n)

Value $mn Volume

Exhibit 13: Monthwise M&A Trend

9

M&A value in India in August 2010 grew nearly seven fold to$4.2 billion, up from $620 million in August 2009. Dealvolume also jumped to 58 deals up from 34 in August lastyear.

March and June 2010 had seen some large deals whichresulted in deal value greater than $14 billion during thesetwo months. August was much lower in comparison. IfVedanta's proposed $9.6 billion deal for Cairn India had gonethrough deal value would have been much higher.

Deal value in August 2010 was $1.2 billion lower than that inJuly 2010, and also lower than that in March, May and June2010. M&A value in all other months since August 2009 waslower than that in August 2010.

August 2010 has seen the fourth highest monthly M&A dealvalue over the last twelve months.


DEAL BREAKDOWN

0

1

2

3

4

5

6

7

8

9

10

Oct '05 Oct '06 Oct '07 Oct '08 Oct '09 Oct '10

M&A

IPO

Secondary Sale

Buyback

Open Market

0

500

1000

1500

2000

2500

3000

3500


Domestic

Inbound

Outbound

Exhibit 14: M&A Type - Volume Exhibit 15: M&A Type – Value ($ mn)

7688

119 117

31

132

0

20

40

60

80

100

120

140


Exhibit 16: Average Deal Size ($ mn)

5

12

7

5

10

15

0

2

4

6

8

10

12

14

16


Exhibit 17: Median Deal Amount ($ mn)

MERGERS & ACQUISITIONS

10

The average deal amount went up by more than 325% from $31 million in Aug ‘09 to $132 million in Aug ’10. Median deal amount increased by 50% from $10 million to $15 million during the same period.


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug '05

Aug '06

Aug '07

Aug '08

Aug '09

Aug '10

$100m+

$50m-$100m

$25m-$50m

$5m-$25m

Under $5m

Undisclosed0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug '05

Aug '06

Aug '07

Aug '08

Aug '09

Aug '10

$100m+

$50m-$100m

$25m-$50m

$5m-$25m

Under $5m


Undisclosed 14 15 19 17 14 26

Under $5m 5 7 9 10 6 7

$5m - $25m 2 5 7 4 8 12

$25m - $50m 1 2 0 2 3 4

$50m - $100m 1 1 3 3 1 3

$100m+ 1 4 5 2 2 6


Under $5m 10 13 20 22 17 7

$5m - $25m 32 64 71 39 94 154

$25m - $50m 29 81 0 62 110 142

$50m - $100m 95 56 215 215 74 213

$100m+ 593 1450 2546 2114 324 3711

DEAL BREAKDOWNMERGERS & ACQUISITIONS

Exhibit 18: Number of transactions by deal size Exhibit 19: Total investment by deal size

11

In Aug ‘10, M&A’s under $50 million accounted for 84% of total deal volume.

In Aug ‘10, M&A’s under $50 million accounted for only 7% of total deal value.


Top 5 Sectors By Value ($mn) Top 5 Sectors By Volume

SECTORAL BREAKDOWN

Energy, $3,105

Industrials, $325

Consumer Discretionar

y, $310

Materials, $159

Information Technology,

$151

Consumer Discretionar

y, 13

Information Technology,

13

Materials, 9

Industrials, 7

Financials, 4

MERGERS & ACQUISITIONS

Sector Volume Value($Mn) Average SizeConsumer Discretionary 13 310 52Consumer Staples 3 18 6Energy 3 3105 1035Financials 4 68 23Healthcare 4 28 28Industrials 7 325 54Information Technology 13 151 30Materials 9 159 40Telecommunication Services 2 62 62Utilities 0 0 0

Exhibit 21Exhibit 20

Exhibit 22: Sector Summary

12

In Aug ‘10, Energy, Industrials and Consumer Discretionary werethe most targeted sectors for M&A’s with deals worth $3,105million, $325 million and $310 million respectively. Together, theyaccounted for 88% of M&A deal value during the month.

The most active sectors in terms of deal volume were ConsumerDiscretionary and Information Technology with 13 deals eachduring the month. This was followed by Materials with 9 deals.


TOP 5 DEALSMERGERS & ACQUISITIONS

S.No. Target Buyer M&A Type Deal Value ($ mn)

1Linc Energy, Coal Assets

(Galilee Coal Tenement) Adani Enterprises Ltd. Outbound 2,700

2Marcellus Shale Acreage in Central and

Northeast Pennsylvania Reliance Industries Ltd. Outbound 392

3 EIH Ltd. Reliance Industries Ltd. Domestic 220

4 BGR Turbines Company Pvt. Ltd. Hitachi Ltd. Inbound 169

5 INEOS Films GmbH Bilcare Ltd. Outbound 130

Exhibit 23: Top M&A deals in Aug ’10

13

The top 5 M&A deals accounted for 85% of totalM&A deal value in August ’10.

The largest deal in August 2010 was Adani Enterprise’sacquisition of the coal assets of Linc Energy for $2.7 billion ina cash and royalty deal.

This was followed by two acquisitions made by RelianceIndustries Ltd. The $392 million purchase of shale acreage inCentral and Northeast Pennsylvania and the 14.12% stakepurchase in East India Hotels for $220 million.

Other large deals include Hitachi’s investment in BGRTurbines and Bilcare’s acquisition of INEOS Films.

Adani’s acquisition of coal assets in the galilee tenement isamongst the top ten deals of 2010.


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