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VCCEdge Monthly Deal Update Feb 2010

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VCCEdge Monthly Deal Update Feb 2010

  1. 1. A RESEARCH PUBLICATION | February 2010 MONTHLY DEAL UPDATE Feb ’10 Statistics and analysis of Private Equity, Venture Capital and Mergers & Acquisitions in India
  2. 2. Contents Page Number I. Executive Summary 1 II. Private Equity Deal Flow - Introduction 2 - Deal Breakdown 3 - Sectoral Breakdown 5 - Deal of the Month 6 - Top 5 Private Equity Deals 7 III. Private Equity Exits 8 IV. M&A Round Up - Introduction 9 - Deal Breakdown 10 - Sectoral Breakdown 12 Corporate Office: Mosaic Media Ventures Pvt. Ltd. - Deal of the Month 13 B-128, First Floor, Sector 5, Noida - Top 5 M&A deals 14 Uttar Pradesh, India - 201 301 Tel: +91-120-4171111 Email Id: sales@vccedge.com V. Appendix 15 COPYRIGHT © 2010 All rights reserved.
  3. 3. MONTHLY REPORT EXECUTIVE SUMMARY • Private equity investment in India in February 2010 grew more than 33% as compared to the same period last year. Private equity firms invested a total of $455 million as against $346 million in February 2009. The total volume of private equity deals was 26, just one deal more than the 25 deals witnessed in February 2009. • M&A activity in India saw substantial growth on a month on month basis. The total value of deals was $2,317 million in February 2010 as against $162 million in February 2009. In terms of volume, total number of M&A deals increased more than 80% from 28 deals in February 2009 to 51 deals in February 2010. • The largest private equity deal in February 2010 was Tikona Digital Network, that raised $107 million by selling 70% stake to Goldman Sachs, Indivision India Partners and Oak India Investments. Tower Vision raised $300 million from a consortium led by Quadrangle, however the equity portion is unclear hence has not been included in our report. • The environment for private exits too has clearly improved with a sharp rise in February 2010 which saw 10 exits worth $475 million as against only 3 exits each In February 2009 and February 2008. The major exits of the month were: - the $323 million exit by Siva Ventures from Aamby Valley Ltd. - the $62 million exit by Nalanda Capital from Sun TV Network. There is clearly an increase in deal activity in 2010. However, India will require much more confidence, risk appetite and the urge to grow rapidly before it can get back to the peak levels of 2007 and even 2008. 1
  4. 4. PRIVATE EQUITY INTRODUCTION Private equity investment in India in February 2010 grew more A look at monthly numbers reveals that four months in 2009 – than 33% as compared to the same period last year. Deal value June, July, September and December had deal values greater was $455 million in the second month of 2010 as against $346 than that in February 2010. million in February 2009. Deal volume, was virtually unchanged with 26 deals recorded in February 2010, one more than the 25 deals witnessed in February 2009. In terms of deal value, monthly deal activity began with a slow momentum in Nov ’09 and accelerated in Dec ’09 to reach $586 There was a certain degree of momentum that had been million. However, this pace could not be maintained in 2010 and witnessed in the second half of 2009 with $2.8 billion worth of deal activity in January was recorded lower at $410 million. deals as compared to $2 billion in the first half. This continued There was an upswing in Feb ‘10 with deal value 10% higher at on a month on month basis in 2010 with deal value in February $455 million. 2010, 10% higher than that in January 2010, but substantially lower than December 2009. Exhibit 1: Month Wise Private Equity Trend 800 38 40 $747 36 700 35 $612 $586 600 27 30 27 26 Deal Value ($ Mn) 25 24 24 500 22 $455 $486 $455 25 Deal Volume 21 21 $421 $405 $410 400 $346 20 20 300 12 $270 15 200 $165 10 $136 100 5 0 0 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09 Oct'09 Nov'09 Dec'09 Jan' 10 Feb'10 Value Volume (Source: VCCEdge) 2
  5. 5. 500 PRIVATE EQUITY DEAL BREAKDOWN Exhibit 2: Private Equity Breakdown 30 28 With the global private equity markets shrinking, investors have turned away from angel and venture capital deals in 25 22 23 general – and India is no exception. 20 19 16 The total number of VC investments announced during Feb 15 Angel 11 11 ’10 stands at 3 with an announced value of $11 million as 8 VC 10 against 8 deals with a total announced value of $31.1 million PE in Feb ’09 and 11 deals amounting to $135.8 million in Feb 5 2 3 2 2 3 0 1 1 1 0 ’08. 0 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 $145Mn $139Mn $537Mn $2029Mn $346Mn $455Mn Exhibit 3:Median Deal Amount breakdown (Source: VCCEdge) 30 $25 Exhibit 4: Average deal size in ($million) 25 20 80 $75 $14 70 15 $10 $10 60 $9 10 $5 50 5 40 0 30 $28 $24 $16 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 20 $13 $10 Deal Median ($ Mn) (Source: VCCEdge) 10 0 The median deal value in Feb ’10 declined to $10 million as Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 the volume of larger deals (particularly deals > $100 million) declined. Average Deal Size (Source: VCCEdge) 3
  6. 6. 500 PRIVATE EQUITY DEAL BREAKDOWN Exhibit 5: Number of transactions by Deal Size Exhibit 6: Total investment by Deal Size Feb'10 Feb'10 Feb'09 Feb'09 Feb'08 Feb'08 Feb'07 Feb'07 Feb'06 Feb'06 Feb'05 Feb'05 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Undisclosed Under $ 5mn $5 - $25 m Under $ 5mn $5 - $25 mn $25-$50 mn $25-$50 m $50 -$100 m $100+ $50 -$100 mn $100+ Private equity deals under $100 million continued their upward Larger deals ($ 100 million and above) accounted for 76% of total trend, accounting for 95% of total deal flow in Feb ’10. capital invested in Feb ’10. Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Undisclosed 2 9 7 13 4 7 Under $ 5m 17 7 8 10 21 2 Under $ 5m 6 3 5 4 9 1 $5 - $25 m 23 133 77 108 94 158 $5 - $25 m 2 11 7 9 9 13 $25-$50 m 56 - 97 186 71 83 $25-$50 m 2 - 3 6 2 2 $50 -$100 m 50 - 106 - - 104 $50 -$100 m 1 - 2 - - 2 $100+ - - 2 8 1 1 $100+ - - 250 1727 161 107 (Source: VCCEdge) (Source: VCCEdge) 4
  7. 7. PRIVATE EQUITY SECTORAL BREAKDOWN Exhibit 7: Top 5 Sectors by Deal Value in Feb’ 10 ($mn) Major PE investments influencing the deal values of these sectors Real Estate , $50 were investments in Tikona Digital Networks, Ambit Corporate Telecom , $107 Finance, Integreon, Manipal Universal Learning and Multi Commodity Exchange of India. The other sectors, which have significantly IT/IT Services contributed to private equity deal value in Feb ’10, are IT/IT Services , $50 and Real Estate accounting for 21% of total deal value. Exhibit 8: Top 5 Sectors by Deal Volume for the month Feb’ 10 Real Estate , 4 Telecom , 2 Banking, Finance Education , $53 & Insurance , $125 (Source: VCCEdge) Banking, Finance Banking, Finance & Insurance, Telecom and Education were the & Insurance , 6 most targeted sectors for investment with deals worth $125 million, $107 million and $53 million respectively. Together, they IT/IT Services , 4 accounted for more than 62% of total private equity deal value during the month. Education , 2 Sno. Sector Value ($Mn) Volume Avg Deal Size* (Source: VCCEdge) Banking, Finance & The most active sectors in terms of deal volume were 1 125 6 31 Insurance Banking, Finance & Insurance with 6 deals in the month, followed 2 Telecom 107 2 107 by IT/IT Services and Real Estate with 4 deals each. Other sectors 3 Education 53 2 27 contributing to the deal volume were Telecom and Education accounting for 2 deals each. As seen in Feb ’09, Feb ’10 also saw a 4 IT/IT Services 50 4 50 large number of deals in IT/IT Services . 5 Real Estate 50 4 17 *based on disclosed deal values 5
  8. 8. PRIVATE EQUITY DEAL OF THE MONTH Target : Tikona Digital Networks Pvt. Ltd. Announced : 10-Feb-10 Buyer : Indivision India Partners, Oak Investment Deal Value ($ mn): 107.1 Partners, Goldman Sachs Industry : Telecom Deal Feature : Co investing (Source: VCCEdge) Tikona Digital Networks, the wireless Internet broadband The broadband service provider will use the funds to expand service provider, raised $107.1 million (INR 500 crores) from its network coverage to 50 cities by 2010 from the current 10 three PE investors by selling a 70% stake. The investors cities it has operations in. include Goldman Sachs, Indivision India Partners and Oak India Investments. The company is also looking at raising additional funds of up to INR 1200 crore by 2011 and has already submitted its proposal Tikona Digital Networks (TDN) designs and develops wireless to the Foreign investment and promotion board (FIPB) to raise broadband services for home and enterprise customers in Foreign Direct Investment (FDI). India. TDN provides edge voice, video, IT applications and multimedia content services over any broadband or IP centric network. Tikona is engaged in building the next generation wireless broadband services for home and enterprise customers in India. It has an all India class A ISP license granted by the Ministry of Communications, Govt. of India, for this purpose. The company was founded in 2008 by Rajesh Tiwari and Prakash Bajpai. 6
  9. 9. PRIVATE EQUITY Exhibit 9: Top Private Equity deals in Feb ‘10 S.No. Industry Target Buyer PE Type Deal Value ($ mn) Indivision India Partners, 1 Telecom Tikona Digital Networks Pvt. Ltd. Oak Investment Partners, Private Equity 107 Goldman Sachs Banking, Finance, 2 Insurance Ambit Corporate Finance Pte. Ltd. QInvest LLC Private Equity 54 3 IT/IT Services Integreon Managed Solutions, Inc Actis LLP Private Equity 50 4 Education Manipal Universal Learning Pvt. Ltd. PremjiInvest Fund Private Equity 43 Banking, Finance, Multi Commodity Exchange of India Ashmore Investment 5 Insurance Ltd. Management Ltd. Private Equity 40 (Source: VCCEdge) TOP 5 PRIVATE EQUITY DEALS The largest deal by value was Tikona Digital Networks which raised INR 500 crore from Goldman Sachs, Indivision India Partners and Oak India Investments by selling a 70% stake. The top 5 PE deals accounted for more than 63% of the total private equity deals in Feb ’10. In This was followed by the investment made by Qinvest LLC in Feb ’09, the top 5 deals had accounted for more Ambit Corporate Finance Pte. Ltd. and Actis LLP’s investment in than 76% total value for the month. Integreon Managed Solutions, Inc . The Top 5 deals occurred across various sectors. 7
  10. 10. PRIVATE EQUITY PRIVATE EQUITY EXITS Exhibit 10: Top Private Equity Exits in Feb ’10 S.No. Sector Target Buyer Exit Type Deal Value ($ mn) 1 Real Estate Aamby Valley Ltd. Siva Ventures Ltd. Buyback 323 2 Media & Entertainment Sun TV Network Ltd. Nalanda India Fund Open Market 61 Hathway Cable & Datacom ChrysCapital & Morgan Media & Entertainment 3 Limited Stanley India IPO 40 4 Logistics SpiceJet Ltd. Istithmar World Capital Open Market 36 5 Logistics Pipavav Shipyard Ltd. 2i Capital PCC Open Market 21 (Source: VCCEdge) IPO, 1 M&A, 3 The month of Feb ‘10 saw 10 exits worth $475 million. In comparison there were only 3 exits each In Feb ’09 and Feb ’08. Open Buyback, 1 Market, 5 Exhibit 11: Private Equity Exits in Feb’ 10 (Source: VCCEdge) 8
  11. 11. MERGERS & ACQUISITION INTRODUCTION M&A deal value during February 2010 stood at $2,317 A look at monthly numbers reveals that two months in 2009 – million, 13 times the same period last year. Deal count also March and December had deal values greater than that in witnessed an upward trend and increased by 82% to 51 deals February 2010. in February 2010, as compared to 28 deals witnessed during February 2009. In terms of deal value, the monthly deal activity began with a There was a certain degree of momentum that had been slow momentum in Nov ’09, accelerated in Dec ’09 to reach witnessed in the second half of 2009 with $8.4 billion worth $2,991 million. However, this pace could not be maintained in 2010 and deal activity recorded a dip in Jan ’10 & Feb ’10 with of deals as compared to $6.6 billion in the first half. However deals worth $2,816 million and $2,317 million respectively. on a month on month basis deal value in February 2010 was substantially lower than that in Jan ’10 and Dec ’09. Exhibit 12: Month Wise M&A Trend 4000 $3,725 60 54 52 51 3500 46 50 Deal Value ($ Mn) $2,991 3000 42 42 $2,816 Deal Volume 40 36 40 2500 $2,317 32 32 28 29 2000 27 $1,832 30 1500 $1,231 $1,088 $1,160 $1,107 20 1000 $602 $650 $513 10 500 $162 0 0 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09 Oct'09 Nov'09 Dec'09 Jan' 10 Feb'10 Value Volume (Source: VCCEdge) 9
  12. 12. MERGERS & ACQUISITION DEAL BREAKDOWN Exhibit 13: M&A Breakdown The number of domestic deals increased from 18 and 8 in Feb 25 23 ’08 & Feb ’09 respectively to 23 in Feb ’10. The value of domestic deals was $980 million in Feb ’10 compared to $4 20 18 18 million in Feb ’09. In terms of volume, the number of outbound deals more than 15 13 11 Domestic doubled from 8 in Feb ’09 to 18 in Feb ’10. 10 10 10 9 8 8 8 8 Inbound The number of inbound deals was virtually unchanged with 8 6 6 4 4 Outbound deals in Feb ’10, one less than the 9 deals witnessed in Feb ‘09. 5 2 1 0 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Exhibit 14:Median Deal Amount breakdown $395Mn $443Mn $19,237Mn $2,689Mn $162Mn $2,317Mn 25 $22 $21 $22 (Source: VCCEdge) $20 20 Exhibit 15: Average deal size in ($million) 15 800 $696 10 700 $5 600 5 $3 500 400 0 300 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 200 $136 Deal Median ($ Mn) (Source: VCCEdge) $40 $82 100 $27 $14 0 The median deal value in Feb ’10 increased to $22 million Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 as the volume of larger deals increased. Average Deal Size (Source: VCCEdge) 10
  13. 13. 500 MERGERS & ACQUISITION DEAL BREAKDOWN Exhibit 16: Number of transactions by Deal Size Exhibit 17: Total M&A volume by Deal Size Feb'10 Feb'10 Feb'09 Feb'09 Feb'08 Feb'08 Feb'07 Feb'07 Feb'06 Feb'06 Feb'05 Feb'05 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Under $ 5mn $5 - $25 mn $25-$50 mn Undisclosed Under $ 5m $5 - $25 m $25-$50 m $50 -$100 m $100+ $50 -$100 mn $100+ M&A deals under $100 million showed an upward Larger deals ($ 100 million and above) continued their dominance trend, accounting for more than 80% of deal flow in Feb ’10. accounting for 72% of total capital invested in Feb ’10. Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Undisclosed 7 6 12 21 17 23 Under $ 5m 8 13 6 10 13 10 Under $ 5m 5 4 4 4 7 5 $5 - $25 m 22 50 96 99 5 136 $5 - $25 m 2 3 8 7 1 10 $25-$50 m 57 112 78 258 68 197 $25-$50 m 2 3 2 7 2 5 $50 -$100 m - - - 121 76 249 $50 -$100 m - - - 2 1 3 $100+ 1 2 7 1 - 5 $100+ 309 267 19056 2200 - 1724 (Source: VCCEdge) (Source: VCCEdge) 11
  14. 14. MERGERS & ACQUISITION SECTORAL BREAKDOWN The major transactions influencing the deal values of these sectors Banking, Finance were transactions in Essar Telecom Infrastructure, Unitech Wireless & Insurance Ltd. and Equipav SA Acucare amongst others. Other sectors, which , $243 have significantly contributed to M&A deal value in Feb ’10, are Manufacturing Manufacturing and Banking, Finance & Insurance, both accounting , $262 for 21% of total deal value. Telecom , $867 Banking, Finance Telecom , 4 & Insurance , 4 Real Estate , $323 Agriculture , 4 Agriculture , $358 Exhibit 18: Top 5 Sectors by Deal Value for the month Feb’ 10 ($mn) (Source: VCCEdge) Telecom, Agriculture and Real Estate were the most targeted sectors Manufacturing Real Estate , 2 , 11 for investment with deals worth $867 million, $358 million and $323 million respectively. Together, they accounted for more than 65% of total private equity deal value during the month. Exhibit 19: Top 5 Sectors by Deal Volume for the month Feb ’10 (Source: VCCEdge) Snos. Sector Value ($Mn) Volume Avg Deal Size * The most active sectors in terms of deal volume was 1 Telecom 867 4 289 Manufacturing with 11 deals in the month. Followed by 2 Agriculture 358 4 119 Telecom, Agriculture and Banking, Finance & Insurance with 4 3 Real Estate 323 2 323 deals each in Feb ’10. Other sector contributing significantly to 4 Manufacturing 262 11 37 deal volume Real Estate accounting for 2 deals . As seen in Jan ’09, Jan ’10 also saw a large number of deals in Manufacturing. Banking, Finance & 5 243 4 121 Insurance *based on disclosed deal values 12
  15. 15. MERGERS & ACQUISITION DEAL OF THE MONTH Target : Unitech Wireless Ltd. Announced : 10-Feb-2010 Buyer : Telenor ASA Deal Value ($ mn): 433.4 (Source: VCCEdge) Industry : Telecom Deal Feature : Strategic Investment (Source: VCCEdge) Telenor, a Norway-headquartered telecom major, hiked its Unitech Wireless was founded in 2008 and is based in New stake in Unitech Wireless, with an investment of $433.4 Delhi. With this fresh round of funding, Telenor’s total million (INR 2,022 crore). Post this transaction, the investors investment in Uninor stands at INR 6,135 crore. This is the stake has increased to 67.25% from the 60.1% held earlier. fourth and final tranche by Telenor into the firm. Unitech Wireless is a joint venture company of real estate firm Unitech Ltd and Nordic telecom giant Telenor Group. It launched its India operation across eight circles initially, under the brand name Uninor. The eight circles include Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West and Bihar. . 13
  16. 16. MERGERS & ACQUISITION Exhibit 20: Top M&A deal in Feb ’10 Snos. Sector Target Buyer M&A Type Value 1 Telecom Unitech Wireless Ltd. Telenor ASA Inbound 433.4 Essar Telecom Infrastructure Pvt. Transcend Infrastructure Ltd. Domestic 433 2 Telecom Ltd. 3 Agriculture Equipav SA Acucare Alcool Shree Renuka Sugars Ltd. Outbound 334.7 4 Real Estate Aamby Valley Ltd. Sahara India Commercial Corp. Ltd. Domestic 323 5 Banking, Finance, Insurance Northgate Capital LLC Religare Enterprises Ltd. Outbound 200 (Source: VCCEdge) TOP 5 M&A DEALS The largest deal by value was Telenor ASA acquisition of a 7.15% stake in Unitech Wireless Ltd. for a price of $433.4 million. This was followed by, Transend Infrastruture’s $433 million buyout of The top 5 M&A deals accounted for more than Essar Telecom Infrastructure and Shree Renuka Sugars’ 71% of the total M&A deals in Feb ’10. In Feb acquisition of a 51% stake in Equipav SA Acucare Alcool for a ’09, top 5 deals accounted for more than 94% price of $334 million. of total value for the month. Top deals have occurred across various sectors. Two of the top five deals were in the Telecom sector. 14
  17. 17. APPENDIX MOST ACTIVE INVESTMENT BANKS AND LAW FIRMS Active Investment Banks in 2010 Active Law Firms in 2010 Motilal Oswal Investment Advisors Pvt. Ltd. AZB & Partners SBI Capital Markets Limited Desai & Diwanji Angermann M&A International GmbH Indus G&D Law Banco Itau BBA SA Khaitan & Company Blend Financial Services Ltd. Lexygen Enam Securities Pvt. Ltd. Nishith Desai Associates Equirus Capital Pvt. Ltd. Rajani Associates Ernst & Young Pvt. Ltd. Allen & Overy LLP Grant Thornton ALMT Legal ICICI Securities Ltd. Argus Partners IL&FS Financial Services Ltd. Davis Polk & Wardwell LLP Jefferies India Pvt. Ltd. Goodwin Procter LLP Kalozal Consultants Pvt. Ltd. MMB Legal Kotak Investment Banking Naik Naik & Co. Mape Advisory Group Pvt. Ltd. Reed Smith Richards Butler LLP Marks Baughan & Co, LLC Tatva Legal Merrill Lynch & Co. Inc. Vaish Associates o3 Capital Global Advisory Pvt. Ltd. Sand Hill Counsel Singhi Advisors Limited Viedea Capital Advisors Pvt. Ltd. Yes Bank Ltd. 15
  18. 18. Deals VCCEdge has all mergers and acquisitions, private equity and venture capital deals in India starting from 2005 with detailed transaction information. Companies VCCEdge contains more than 10,000 companies searchable on various parameters including industry and geography. Directories VCCEdge contains listings of private equity/venture capital funds, investment banks and law firms active in India with details of their transactions. Intelligence VCCEdge allows users to keep a close tab on deals in the market using its innovative tracking tool. For more information: Arjun Bahl I Analyst I VCCEdge VCCEdge is an online financial research +91-120-4171103 I arjun@vccircle.com platform brought to you by The For sales enquiries: VCCircle Network. Shashank Randev I BDM I VCCEdge +91-120-4171111 I sales@vccedge.com

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