Shocker! 30 PEs exit India, withdrawing $1.46 bn

Private equity firms have offloaded stakes worth $1.46 billion in the Indian companies during the April-June quarter this year, reveals the data by deal tracking research firm VCCEdge.

It says 30 PE firms have divested stakes worth $1.46 billion during April-June this year against 29 PE firms that disinvested $820 million in the same period last year.

Experts feel that the quarter-on-quarter increase in the PE exits was driven by equity firms' profit booking on account of the significant recovery in the stock markets.

SMC Capitals Equity Head Jagannadham Thunuguntla said the exited private equity firms were part of the investment wave that flooded the Indian market in 2006-2007.

"Such investments generally have a time horizon of 3-5 years, so now was the right time to exit as the market has been sustaining at decent levels for almost an year and the investors could book profit at the current levels," he said.

However, he added, "going forward if the markets come under pressure as expected, the exits may go down as bringing initial public offers will not be possible in the weak market."

Some of the top private equity exits last quarter included Symphony Capital Partners Ltd, which divested $694 million from DLF Assets Ltd, WL Ross & Co that sold stake worth $127 million from SpiceJet and Saif Partners that disinvested $124 million from Intelligroup Inc, VCCEdge report said.

Value Research Online CEO Dhirendra Kumar says market fluctuations due to the euro-crisis have led PE investors to lose confidence, wherein they preferred to exit investments in the Indian companies.

He, nonetheless, added, "There is a normalisation in the market and the valuations have picked up."

Out of the 30 PE firms that exit during the period under review, 15 opted the route of public market sales, nine exited via merger and acquisition, three by secondary sales and two made their way out with buyback option.

Only one firm chose the primary market route of exiting via an IPO as firms are still sceptical on the company valuation offered in the process.