PE transactions in India rise three-fold to $840 million in April

However, the total value of PE deals reported in April was less than the quantum of investment made by these firms in March

India emerged as one of private equity investors' favourite investment destinations in April, with the volume of transactions rising three-fold to $840 million in comparison to the same month last year, according to a study.

According to the monthly report of VCCEdge, the financial platform of, private equity deals in India amounted to $840 million in April 2010, against $285 million in the corresponding period of the previous year, reports PTI.

An upturn was also witnessed in terms of the number of deals recorded during the said period. In April this year, 35 PE transactions were reported, against 22 deals registered in the same period in 2009, the study added.

However, the total value of PE deals reported in April was less than the quantum of investment made by these firms in March. The study said, "On a month-on-month basis, deals value in April 2010 was lower than that in March 2010. The deal activity began with a slow momentum in February 2010 and accelerated in March 2010. However, this pace could not be maintained and deal activity recorded a dip at $840 million in April 2010."

India Inc recorded deals worth $455 million, $501 million and $972 million in January, February and March respectively.

PE transactions under $50 million accounted for 88% of the total deal volume in April this year, while smaller deals ($50 million and below) accounted for 50% of overall capital invested in the last month.

The largest PE deal in April was a $200-million investment in GMR Energy by Temasek Holdings, the private investment company owned by the government of Singapore.

The Temasek-GMR Energy PE deal was followed by the investment made by Bain Capital Advisors India and TPG Capital in Lilliput Kidswear and Actis LLP's investment in TRIL Roads.

A sector-wise analysis showed that utilities, consumer discretionary (luxury goods) and industrials were the most targeted sectors for investment, with deals worth $201 million, $186 million and $160 million respectively in April, 2010.

In terms of deal volumes, the most active sectors were healthcare, finance and luxury goods.


M&A deals key to fundamental changes in automotive space: PwC

Automotive companies seeking long-term success would drive the deal market in 2010 by developing and executing strategies for sustainable growth and value creation

Mergers and acquisitions (M&A) activity is expected to drive fundamental changes necessary for long-term sustainability of the Indian automotive industry, a report by PricewaterhouseCoopers (PwC) has said, reports PTI.

According to the ‘Automotive M&A insights for 2009’ report by the global consultancy firm, the deal market will play a critical role as market participants pursue transactions with a focus on synergies, including cost savings and adding revenue to their business.

“Automotive companies with stronger operating models and cash positions are likely to leverage M&A to develop a competitive advantage through the consolidation of scale and expertise,” the report stated.

Automotive companies seeking long-term success would drive the deal market in 2010 by developing and executing strategies for sustainable growth and value creation.

“The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing. Some of the Indian original equipment manufacturers (OEMs) as well as component suppliers, in their quest to become global players, are on the lookout for opportunities in the global market,” PwC India leader for Automotive Practice Abdul Majeed said.

“Similarly, OEMs from other emerging markets will look for growth in the Indian market through more and more alliances,” Mr Majeed added.

The value of global automotive M&A deals soared to $121.9 billion in 2009, up over three-fold from $31.6 billion in 2008, driven mainly by an increase in activity in the US.



Is Piramal Healthcare in an exit mode?

The company says that it has no plans to exit the diagnostics space altogether. However, as we had earlier reported, its plans of acquiring smaller labs for growth does not seem to be working 

Piramal Diagnostic Services Private Ltd (PDSL), the diagnostics service unit of Piramal Healthcare Ltd, has shut down its diagnostics operations in Delhi. A few company officials say that this step is being taken due to losses the company has incurred over two to three years. Apparently, 60 people have also been retrenched with a compensation of three months’ salary at the Delhi unit. PDSL’s operations are estimated to be around Rs200 crore.

Moneylife had reported earlier ( that the company’s strategy of buying a large number of smaller players (called ‘roll-ups’ in the US) might not be successful. PDSL had plans of acquiring 10 pathology labs across the country, from which it was targeting a minimum turnover of Rs5 crore each from these units.

Dr Swati Piramal, director, Piramal Healthcare, informed Moneylife, “The Delhi unit was located out of the way, which made it difficult for customers to access it. So we decided to close it.” However, she denied that the company had plans to exit the diagnostics space altogether. “We would like to clarify that the news appearing in certain sections of the media about the Piramal Group planning to close its diagnostics operations is completely baseless and untrue. We have expanded rapidly till 2009 and will continue to expand after consolidating and strengthening business processes.” 

Metropolis Healthcare and Piramal Healthcare are among the most competent players in the pharmaceutical space. Metropolis started its operations in 1981 and has 50 plus state-of-the-art laboratories across the globe. Ameera Patel, CEO and executive director, Metropolis Healthcare Ltd said that Piramal’s unit in Delhi was a greenfield project, which could be the reason for the closure.

“Greenfield projects in general are difficult as trust and credibility have to be established from scratch in that location,” Ms Patel told Moneylife.

Piramal Healthcare had recently acquired ‘I-Pill’, an emergency contraceptive pill brand from Cipla and the anesthetic product operations of Bharat Serums, a plasma derivatives manufacturer.

Sapna Jhawar, a pharmaceutical analyst from ShareKhan explained, “A lot of news has been on and off in the media about Piramal’s selling plans. Piramal has not been that aggressive with acquisitions lately—especially after their plans to acquire 5-10 path labs earlier. It (the diagnostics business) has been a steady source of income for Piramal; it could have made about Rs250-Rs300 crore by 2012. It doesn’t really make sense for Piramal to shut down its diagnostics operations until and unless it has got a good value for the business from a private player. Plus, even if this is the case, it will not affect Piramal’s business to a great extent, considering that it (the diagnostics business) is a small part of its (overall) business.” The Delhi unit contributed around less than 1% to Piramal Diagnostics’ revenues, and its closure is not expected to impact its overall operation in a significant way.


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