PE deals zoom seven-fold to over $1 billion in Aug

New Delhi: Private equity firms have invested over $1 billion in Indian companies in August, more than 7% from the year-ago period, with investors increased preference towards telecom and financial services sector, reports PTI.

"Total private equity (PE) investment in India grew 7.5 times to $1.3 billion as against $179 million in August 2009," according to data compiled by deal space research firm VCCEdge.

While comparing from July, deal value in August was up 60% due to some large deals during the month.

"August 2009 had seen the lowest monthly deal value since the beginning of 2009, with the exception of March '09 which was at $136 million. Since then an upward trend has been witnessed with deal value peaking during August 2010, suggesting a recovery from last year's slowdown," the report noted.

Upturn was also witnessed in terms of the number of deals recorded in the last month. In August this year 35 PE transactions were posted, against 24 deals registered in same period in 2009.

As many as 35 companies saw PE investment pouring during the period, while PE firms made an exit from 18 other companies.

PE firms generally exit from their investment through buyback of shares by promoters, open market transactions, merger and acquisitions and public offers.

During the month, industrial, telecom and finance were the most targeted sectors for investment with deals valued $309 million, $304 million and $298 million, respectively.

Two of the largest investments in the month were made by Macquarie-SBI Infrastructure Fund. It invested $304 million in Viom Networks and $200 million in GMR Airports Holding.

Besides, other large deals include the $290 million investment made by Blackstone Advisors in Moser Baer Projects.

At the same time, there were 18 exits worth $249 million in August 2010. These included private equity firms - Kubera Cross Border Fund Ltd, Walden International, Global Internet Ventures - $100 million exit from Venture Infotek Global and Citi Venture that exited its investment in Emaar MGF Land Ltd.


FM expects industry to grow by 12%-13% this year

New Delhi: Enthused by 13.8% industrial growth in July, finance minister Pranab Mukherjee today pegged industrial expansion at 12%-13% this year, reports PTI.

He also said the manufacturing sector, which generates jobs, was performing well.

"I expect average industrial growth to be between 12%-13% per cent this year. Manufacturing, which generates employment, is doing well," Mr Mukherjee told reporters.

When asked whether the Reserve Bank of India (RBI) will further tighten monetary policy to combat inflation, the finance minister said, "The government and RBI are watching. Let us see. We will take actions as the situation demands."

The RBI is expected to raise its short-term borrowing and lending rates at its 16th September mid-quarter review.

Overall inflation for the month of July was 9.97%, while figures for August are expected next week. Food inflation shot up to 11.47% towards the end of August from 10.86% in the previous week.

Industrial growth figures for July exceeded expectations by accelerating to 13.8% in July from 7.2% a year ago. Most experts had earlier pegged the growth to be lower, in single-digit figure.

Manufacturing grew by 15% in July against 7.4% a year ago. However, industrial growth stood at 11.4% in the first four months of this fiscal.

The government expects the industry sector, which constitutes little less than 20% to India's economy, to grow by 8.5% this fiscal.


Weekly Market View: The market looks overbought, a correction is due

The market finished the truncated week with smart gains. The indices ended in the green on all trading days, scaling fresh 31-month highs on all four days. Global as well as domestic indicators will give direction to the market next week.

The indices ended with gains of over 1.75% on the first day of the week buoyed by optimism in the Asian region. The gains were pared the next day. The market ended flat with a positive bias on Wednesday on dour global cues. The last trading day of the week was punctuated with modest gains, mainly on buying support from institutional investors in the post-noon session.

For the week ended 9th September, the key barometers ended with gains of 3% each with the Sensex advancing 578.23 points and the Nifty gaining 160.65 points. The market will remain closed today for a local holiday.

The top gainers on the Sensex on a weekly basis were Tata Steel, ACC (up 10% each), State Bank of India (SBI) (up 8%), Hindalco Industries (7%) and Jaiprakash Associates (up 6%). The losers on the benchmark were Reliance Infrastructure (R-Infra) (down 2%) and ITC (down 1%).

All sectoral indices on the BSE ended in the positive terrain during the week under review. The gainers were led by BSE Metal index (up 5%), BSE Bankex and BSE IT (up 4%) each. The BSE Fast Moving Consumer Goods (FMCG) was at the lower end of the list, ending flat.

Belying fears of a slowdown, industrial growth accelerated to 13.8% in July from 7.2% in the corresponding month last year, on the back of a 63% jump in capital goods production.

Among the main industry segments, manufacturing activity expanded by 15%,  the mining sector grew by 9.7%, electricity generation growth slowed down to 3.7% while capital goods industry and consumer durable goods production expanded by 63% and 22.1% respectively in July.

Experts earlier had predicted that industry growth would be a single-digit number for July because of the base effect. Industrial growth for the first four months of this fiscal stood at 11.4% from 4.7% a year ago.

Driven by a hike in prices of perishable items, food inflation rose to 11.47% for the week ended 28th August, fuelling fears of a rate hike by the Reserve Bank of India (RBI) in its policy review later this month. Food inflation was 10.86% in the previous week.

Fuel inflation for the week under review remained unchanged at 12.71%.

Overall inflation for July, as measured by the wholesale price index (WPI), stood at 9.97% and data for August is expected next week. The RBI is scheduled to hold a mid-quarterly policy review on 16th September.

Direct tax collections shot up by 13.91% to Rs1,00,112 crore in the first five months of the 2010-11 financial year till August, compared to Rs87,888 crore in the corresponding period (April to August) of the last fiscal, as per data released by the finance ministry.

While corporate tax collections grew by 17.05% to Rs57,750 crore in April-August, 2010, from Rs49,339 crore in the corresponding previous period, personal income tax (PIT) collection - including securities transaction tax, residual fringe benefit tax and banking cash transactions tax - rose by 9.68% to Rs42,217 crore from Rs38,491 crore.

The government exuded confidence that the new Company Law, which promises greater shareholder democracy and stricter corporate governance norms, will be enacted by the end of this fiscal.
The Companies Bill 2009, which seeks to replace the half-a-century-old Act, was introduced in the Lok Sabha in August last year. The standing committee report on the new Companies Bill was presented in the Lok Sabha last week after nearly eight months of deliberation.

The Bill proposes to tighten the laws for raising money from the public. It also seeks to prohibit insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

On the corporate front, a proposed Rs50,000-crore deal to merge telecom tower assets of the Anil Dhirubhai Ambani group firm Reliance Infratel with GTL Infrastructure has failed to materialise, reports earlier this week indicated.

The two parties could not reach an agreement within the stipulated time frame and the non-binding term sheet signed by them on 27 June 2010, expired on 31st August, GTL Infra said in a filing to the Bombay Stock Exchange.

R-Infratel's parent company Reliance Communications further said that it has begun searching for other investors for sale of the tower assets, but did not specify the reasons for failure of deal with GTL Infra.

The Bombay High Court, earlier this week, dismissed Vodafone International's petition challenging an Income Tax (I-T) department order that demanded Rs12,000 crore in liabilities arising out of the company's $11-billion takeover of Hutchison Telecom. A division bench held that the I-T department had the jurisdiction to tax the transaction.

It, however, gave liberty to Vodafone to argue before the tax department that no penalty should be imposed as they genuinely believed they had no liability to deduct tax at source.




7 years ago

Can you tell on what basis / parameters, the markets are overbought? Or is it just octopus type of predictions. Nowhere in the above article there is any mention about why it is overbought.

If it is based on technical analysis the markets aren't overbought yet. If the markets hits 31-month, it doesn't mean overbought.

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