Posts Tagged ‘Private Equity’

Fund Raising by PE and VCs to Increase by 30-40 percent in 2010

Fund Raising by PE and VCs to Increase by 30-40 percent in 2010

.

Private equity (PE) players and venture capitalists (VCs) are back in the market to raise funds.

.

Market experts believe that 2010 will see these players raising $13-15 billion, almost as equal to what PE players and VCs raised in 2008.

.

PE players and VCs had raised $10-11 billion in 2009, though most of this was in the second half of 2009.

.

Experts expect to see a 30-40 per cent rise in fund-raising this calendar year courtesy PE players and VCs.

.

“Close to 45 funds are either preparing to enter the market or have already hit the road to raise funds.

While I feel that matching the level of 2007 is difficult, the year will be better than 2009,”

said Jagannadham Thunuguntla, equity head, SMC Capitals.

.

Industry experts expect that this year will be governed by returns.

Many Industry experts are of view that LPs are going to focus on returns and returns will be more than 20 per cent, better than in 2009.

.

“I think LPs are still trying to rework their portfolios.

It will be difficult for general partners to convince LPs to invest,” said Thunuguntla.

.

Infrastructure, consumer services, education, healthcare, financial and clean technology will be the favoured sectors, say experts.

.

One sector that is already in focus is infrastructure.

The players are in the process of raising close to Rs 8,541 crore ($1.78billion) worth of infrastructure funds.

.

Investors will become company-specific rather than sector-specific.

Good sectors can have bad companies and so it makes sense to focus on companies,” said Thunuguntla.

.

Fund-raising by VCs already seems to be gaining momentum.

Moreover Industry experts are of view that fund-raising will be more selective this year.

It will be better in 2010 than what was seen in 2008-09.

.

However experts say that the number of funds that get allocation from LPs will come down significantly this year.

.

Global Slowdown Caused Slump in Growth Rate of the Demat Accounts

Global Slowdown Caused Slump in Growth Rate of the Demat Accounts

 

Despite the blistering pace kept by the equities market in the past 10 months, the rise in the number of new retail investors has slowed down.

😦

According to the data from National Securities and Depositories Limited, the growth rate of demat accounts has declined to 6 per cent, compared with 13 per cent last year.

Experts attribute this to the overall slowdown in the economy.

😦

As per experts a prolonged, dull phase in 2008 made investors jittery about investing in the equities market.

Also, as many individuals were scared of losing their jobs, so they did not intend to invest more.

There has been an average growth of 14.75 per cent in investors opening demat accounts till 2008.

🙂

Financial intermediaries such as broking companies, whose fortunes are directly linked to the markets, have witnessed subdued sentiments in the equity space from retail investors.

Experts cited 2008 market crash and the global financial meltdown as the reason for this negative development.

Moreover recession of last year had demotivated and scared the retail investors good enough to drive them away from the further investing.

This caused enormous loss for Financial intermediaries and most of the brokerage houses had to shut shop and retrench many staff too.

😦

“The confidence of the retail investors is yet to be restored. Even in the case of new initial public offerings, only the institutional part is getting oversubscribed,” said Jagannadham Thunuguntla, head of research at SMC Capitals.

🙂

In India, PE & VC Funds Turn Selective :)

PE and VC funds in India have tightened their purse strings.

PE and VC funds in India have tightened their purse strings.

Private equity (PE) and venture capital (VC) funds in India have tightened their purse strings.

That’s because limited partners (LPs) —the main source of funding for venture capitalists —are reducing their exposure in this space.

According to industry estimates, there has been a drop in new investments to the tune of 71% during the first nine months of 2009 as compared to the same period last year.

😦

Industry experts say limited partners are miffed with the returns shown by the general partners, who manage the fund and its operations on a daily basis.

Many LPs are looking at better returns and shorter investment term cycles, instead.

LPs have instructed some of their funds to conserve cash and value in the existing portfolio. Some limited partners are not investing in private equity funds on an incremental basis.

This assumes significance in the current context because it’s tough to raise fresh funds, and the competition to attract limited partners to VCs is quite intense.

A venture capital firm is usually structured in the form of a limited liability partnership and people who invest in it are limited partners.

In India, the bulk of venture capital inflow is from Foreign markets like the US and Europe, with limited partners mostly being institutional investors such as pension funds and insurance companies and family offices who are mostly based out of the US.

🙂

Indian venture funds are also in place, many of which tap money from overseas by means of an offshore fund.

With new funds not in sight, private equity and venture capital firms are also becoming selective.

😦

Are Retail Investors Staging a Comeback in Country’s Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

In what could be viewed as a sign of revival of retail interest in the country’s primary market, the initial public offering of Indiabulls Power has received over 31,000 applications from retail investors on the first day of its issue.

🙂

Although the retail portion of the offering remained under subscribed, the interest was more than what was seen in three major IPOs of the fiscal — NHPC, Oil India and Adani Power.

According to an analysis, NHPC‘s over Rs 6,000 crore issue received 30,474 retail applications on the first day.

Adani Power‘s Rs 3,610 crore issue got only 15,000 such applications.

The Rs 4,982 crore issue of OIL received 7,700 applications.

🙂

“Retail investors are gradually staging a comeback and it is a pleasant surprise for the primary market,” SMC Capital Equity Head Jagannadham Thunuguntla said.

The Rs 1,700-crore initial public offer of Indiabulls Power, which hit the market yesterday, got subscribed nearly six times, as flooded the counter with maximum number of bids.

However, bids from retail investors on the first day of subscription accounted for only 37 per cent of the shares reserved for them.

🙂

PE Funds Raising Plummets to Lowest Levels Since 2003

Private equity fund raising plummets to lowest levels since 2003

Private equity fund raising plummets to lowest levels since 2003

Fund raising by global private equity funds has dipped to an over five-year low of $38 billion in the third quarter of 2009, as fund managers are refraining from making any new commitments before next year.

😦

Fund raising in Q3 of 2009 represents a 55% slump from Q2 of 2009, when the PE funds had raised an aggregate $84 billion globally, according to latest report by a reputed global research firm Preqin.

Private equity fund raising plummets to lowest levels since 2003, with the third quarter figures equivalent to just 45% of the $84 billion raised in Q2 2009.

Many of the funds that are closing are doing so short of target, and a number of fund managers putting their fund raising efforts on hold until 2010, or abandoning them altogether for the foreseeable future.

😦

However, the report noted that the investment shift from the private equity asset class is only short term and the institutional investors would pull back again in the final quarter of this year and in 2010.

🙂

Over the year the number and aggregate fund raising target has dropped considerably.

Reasons can be the slowdown in launches of fund raising programmes, plus an increase in the number of funds being abandoned.

Institutional investors are not making new commitments at anything close to the rate they were in previous years.

The rate of fund raising to drop by nearly 70% over the course of a year is a dramatic fall and demonstrates just how challenging it has become to raise new funds in the current scenario.

😦

PE-backed Companies Queuing up the Market with IPOs :)

pressure from PE players is forcing companies to take the IPO route :)

pressure from PE players is forcing companies to take the IPO route 🙂

The buoyancy in the capital markets over the past few weeks has seen a spate of initial public offerings (IPOs) hitting the market.

Sectors such as infrastructure, power and real estate are the ones that have been most bullish.

🙂

However, most companies that are taking the IPO route for raising funds are the ones that have strong private equity (PE) backing.

And in most cases, it is the pressure from these PE players that is forcing these companies to take the IPO route.

🙂

Recently, four real estate companies – Emaar MGF Land, Lodha Developers, Sahara Prime City and Ambience Ltd – filed draft red herring prospectuses (DRHPs) with the market regulator Securities and Exchange Board of India (Sebi) to launch their IPOs.

All the four together are looking to mop up over Rs 11,000 crore.

🙂

Said Jagannadham Thunuguntla, equity head, SMC Capitals Limited, “Several companies are filing their IPO prospectuses with Sebi, with the confidence provided by the strong capital market bounceback and the healthy subscription levels seen by the IPOs of Adani, NHPC and OIL.”

“Taking the capital market bounce-back as a good exit opportunity, several PE-backed companies are queuing up with their prospectuses.

While this trend of PE-backed companies filing prospectuses can be seen across industries, it is quite prominent in the real estate industry,” he added.

According to him, “Several companies which have filed their prospectuses in the past three to four days have PE backing at the corporate or SPV levels.

The recent capital market bounce-back is giving a fresh breath of life to PE players” he added.

🙂

This trend of PE-backed companies going to the market with IPOs is not a surprise. PE firms are keen to capitalize on the buoyant financial markets and exit certain investments.

🙂

QIPs Outstripped PE Funding & IPOs in Fund Raising Process ;)

QIP-investments-outpace-PEfunds

Qualified institutional placements (QIPs) have outstripped private equity (PE) funding since January by at least eight times, making it by far the most popular fund-raising route for firms this year.

🙂

QIPs raised at least Rs. 21,209 crore since January this year, while PE funds invested only Rs. 2,574 crore in listed firms.

🙂

QIPs have almost raised more than twice of initial public offerings.

A QIP is a private placement by a listed company of shares or securities convertible to equity with qualified institutional buyers approved by market regulator Securities and Exchange Board of India(SEBI).

🙂

Data from Delhi-based investment bank SMC Capitals Ltd shows another 48 QIPs worth Rs.43,891 crore are in the pipeline.

But analysts do not expect a significant rise in the number of, or funds through, PE deals this year.

🙂

Typically, PE investments take up to six months to complete, whereas a QIP can be done in up to four weeks, making the fund-raising process faster and more reliable since the institutional buyers are selected carefully.

🙂

Also, in a QIP, the institutional buyers rarely seek a seat on the company board, or management control, a common practice in large PE deals.

🙂

Since PE is perceptionally intrusive for promoters, QIP serves as a good alternative.

However this QIP structure is liked by investors and firms as in a QIP the window is shorter and money can be raised quickly.

🙂

While real estate firms typically prefer QIPs for their need of capital at short notice, the companies currently waiting to do QIPs are across sectors, including telecom, entertainment, retail and information technology.

🙂

In line for QIPs are Reliance Communications Ltd, Pyramid Saimira Theatre Ltd, Pantaloon Retail (India) Ltd  and few more.

🙂

Some firms, though, have taken both routes for their funding needs.

Historically, PE investments in India have been in the form of private investments in public enterprises, or PIPEs, which also happen to the only firms eligible for QIPs.

🙂

“Private equity investors have missed the boat,” Jagannadham Thunuguntla, head of SMC Capitals, said in a statement.

Companies that are in the pipeline for QIPs may also look for American depository receipts or global depository receipts for funds, he  added.

🙂

44,000 Crores to be Raised by Indian Firms :)

Indian-corporates-raise-44k crores

Indian corporates raised Rs 21,691 crore through the qualified institutional placement (QIP) route during the first half of this fiscal and the funds raised through this route are expected to double in the second half.

🙂

Mr Jagannadham Thunuguntla, the equity head of SMC Capital, said: “As of now, about 48 companies have received requisite resolutions from either shareholders or their boards to raise the funds through QIP route. The total amount proposed to be raised by these companies is about Rs 44,000 crore.”

🙂

He further said: “As there is no requirement for the approval of the Securities and Exchange Board of India (Sebi) for the QIP issuance. These companies are ready to offer their QIP whenever they are confident about the market conditions.”

🙂

“Some of the prominent names of the corporates that would be raising funds through this route include Tech Mahindra, Essar Oil, Hindalco, RCom, Omaxe, Pantaloon Retail, Jet Airways, Ansal, JSW Steel and L&T,” he said.

🙂

It seems that the Indian promoters have regained their confidence and enthusiasm for fund raising, he added.

🙂

It is turning out that corporates are raising funds through QIP route as a last alternative and not as a preference.

Most of the IPOs launched in the last seven to eight months had put up a flop show.

😦

The bank funds that are another source of funding are not available for most of the corporates.

Depending upon the sector and profile, banks are asking for premium over interest rates and for smaller companies, banks are not offering loans.

So the corporates that are looking for the expansions would opt for the QIP route to raise the funds, Mr Thunuguntla added.

🙂

Note : For More latest Industry,Stock Market and Economy News Updates, Click Here

SMC Global Securities : A Leading Financial Services Provider in India :)

Before You Realise Your Loved Ones Will Grow 🙂

If you find yourself asking the question –

Why should I Save ?

Why should I Invest ?

Where do I Invest ?

Who would Guide me to take informed decision on my Investments ?

…then look no further !

[:)]

SMC Global Securities, a leading Financial services provider in India, a vertically integrated investment solutions company, with a pan-india presence is there to guide you and provide complete investment solutions to you.

🙂

Currently, SMC has a highly efficient workforce of over 4,000 employees & one of the largest retail network in India currently serving the financial needs of more than 5,50,000 satisfied investors.

🙂

WEB:

http://www.smcindiaonline.com

http://www.facebook.com/pages/
SMC-GLOBAL-INVESTMENT-SOLUTION/
104149467952?ref=nf

http://www.facebook.com/group.php?
gid=90885076779&ref=ts


http://smcinvestmentsolutionindia.ning.com

http://networkedblogs.com/blog/smc_global
_blog_moneywise_be_wise/

If you find yourself asking the question –

Why should I Save ?

Why should I Invest ?

Where do I Invest ?

Who would Guide me to take informed decision on my Investments ?

…then look no further !

SMC Global, a leading Financial services provider in India, a vertically integrated investment solutions company, with a pan-india presence is there to guide you and provide complete investment solutions to you.

Currently, SMC has a highly efficient workforce of over 4,000 employees & one of the largest retail network in India currently serving the financial needs of more than 5,50,000 satisfied investors.

Weekly Equity Update 21st-28th August :)

Weekly Update

After closing almost flat in penultimate week, in the week gone by markets closed in green terrain following the global markets which rallied to 10-month highs buoyed by renewed hopes that the global economic recovery is gathering pace and is pulling out of its deepest recession since the 1930s.

🙂

Closer home, revival of monsoon rains, fresh buying by FIIs and firm European market boosted sentiment.

Moreover the statement made by FM that government expects GDP growth to accelerate to over 8% in 2010-11, with the economy showing signs of recovery, acted as a booster to markets.

🙂

However it is expected that higher food prices will lead to WPI inflation accelerating to 6% in the fiscal year to March 2010.

🙂

On the world economic front, the US economy shrank at an annual pace of 1% between April and June 2009, unchanged from an initial estimate released last month.

From the United Kingdom, its economy contracted 0.7% in the second quarter as the recession prompted companies to cut investment and inventories while consumers scaled back spending.

😦

Japan‘s exports tumbled and stood at 35.7% for a tenth straight month in July as demand from all of the nation’s major markets deteriorated.

Trend of all markets is up though Shanghai has topped out and moving down which is a cause of concern.

🙂

Nifty has support between 4600-4500 and Sensex between 15500-15000.

🙂

Once again commodities have shown the buoyancy that they can hold the support.

One or two day’s correction in the prices couldn’t break the trend of commodities. However upside is limited.

Resembling last week, current week as well is jam-packed of event risk as GDP data of many countries will release which will make commodities volatile throughout the week accordingly.

Precious metals may trade in a range with upward bias.

Back at home, to see more upside it has to trade above the level of 15000 in MCX.

🙂

In agro commodities, buying may return in spices as recent fall in the prices has made Indian parity more competitive in international market.

🙂

MARKET OUTLOOK

Trend of all markets is up though Shanghai has topped out and moving down which is a cause of concern.

It seems that currently US markets are determining the overall trend and our markets might be linked up with US markets now as we have broken above 4730 Nifty.

🙂

If US markets don’t react, then we should be seeing higher levels ahead.

Nifty has support between 4600-4500 and Sensex between 15500-15000.

🙂

EQUITY TABLES :

1. Indian and Sectoral Indices :

weekly indices update

2. BSE Movers and Shakers & IA Equity Figures

BSE Movers and Shakers & IA Equity Figures

3. NSE Movers and Shakers :

NSE Weekly Movers and Shakers

4. MONEY MARKET & ECONOMIC INDICATORS :

MONEY MARKET & ECONOMIC INDICATORS

5. GLOBAL INDICES :

Weekly GLOBAL INDICES


From the United Kingdom, its economy contracted 0.7% in the second quarter as the recession prompted companies to cut investment and inventories while consumers scaled back spending.