According to Jagannadham Thunuguntla, equity head at SMC Capitals, the PE space has been showing unmistakable signs of slowdown. “The biggest challenge right now is how they convince the investment committees sitting in Mauritius, London or New York with new proposals as most of the investments made during the last two years have been under-performing,” he said.

1. PE deals log good returns in ’08
25 Jan 2009, 0145 hrs IST, Anand Rawani, ET Bureau
NEW DELHI: A number of private equity (PE) deals were able to garner good returns in 2008 despite the
economic slowdown. In fact, investments made by Navis Capital Partners in Sah Petroleums and
Nalanda Capital in SunTV Network turned out to be the best performing PE deals in public limited
companies through preference issues in 2008.
These companies fetched a return of 31% and 13%, respectively. The other deals, which performed
relatively better, were investments made by Future Capital Holdings in Centrum and Zwirn Pragati Capfin
in DFI Finance, a SundayET analysis reveals.
These returns are significant in the backdrop of very poor returns in PE investments made during the last
two years. The PE investments through preference issues in 2008 came down by more than 53%, and
the investment worth $1.67 bn made in 2008 is now valued at just $0.78 billion.
Expecting the number and size of PE deals to go up from the second half of the year, Nitin Deshmukh,
head of PE at Kotak Private Equity said, “The negative performance of the stock market has hurt the
sentiments of private equity investors considerably, but things will be better from the second half of the
year.”
The deals that suffered the maximum losses were the investments made by Shyam Equities in
Sambhaav Media and by ICG Q in Prime Securities. Current values of these investments are down by
whopping 88% and 95%, respectively. Sector wise, deals from infrastructure booked the highest loss. The
investments are down by more than 86%. Pharmaceuticals and retail follow suit with a loss of 83% and
82%, respectively.
The economic downturn has also taken a toll on the number of deals. There were only 30 deals in 2008.
Banking and financial services and manufacturing sector attracted the highest number of such deals.
The former drew eight deals, and there were seven deals in the manufacturing sector. The other sectors
that attracted maximum number of deals were media, shipping and logistics. The oil and gas sector
attracted only one deal but the return from this deal was positive.
According to Jagannadham Thunuguntla, equity head at SMC Capitals, the PE space has been
showing unmistakable signs of slowdown. “The biggest challenge right now is how they convince the
investment committees sitting in Mauritius, London or New York with new proposals as most of the
investments made during the last two years have been under-performing,” he said.