Saturday 12 January 2008

India tops Asia PE sweepstake in 2007

For the first time, India has topped the Asian Private Equity chart in terms of deal value. India saw PE inflows to the tune of US $9.9bn from 290 deals in 2007, says the the Centre for Asia Private Equity Research (CAPER). China is second in the list with total PE amount of US $9.5bn, followed by Taiwan at US $5.8bn.

In Asia (including Japan), India has been fourth in investment volume for the 2004-2006 period. Incidentally, Japan which has been No.1 since 2003 except for last year when Australia topped the charts, dropped to sixth place with PE deals worth US $3.2bn, according to the CAPER data.

In 2007, the Asian private equity industry saw a rising number of Asia-based limited partners, says the CAPER. An additional US$36.4bn of fresh capital came into the market, but the deal value declined by 21% to US$42.2bn, it adds.

"The industry also witnessed a new high in divestment activities, with US$17.3bn of realised capital being returned to investors' coffers during the year," according to the regional PE research tracker.

Institutional Investors

  • 292 institutional investors were known to have made allocations
  • corporate investors dominated, accounting for 20% of the known allocations, followed by government agencies at 11%

Funds

  • US$36.4bn of fresh capital was recorded during 2007, an increase of 28.3% compared to that for 2006
  • venture capital funds recorded the biggest growth at US$7.1bn, an impressive 64.7% surge compared to US$4.3bn for 2006
  • buyout funds accounted for US$15.1bn, while funds for growth/expansion situations amounted to US$12.3bn
  • China led in recording the largest pool of fresh capital at US$6.9bn, followed by India with US$5.3bn of fresh capital

Investments

  • US$42.2bn in aggregate deal value recorded, a decline of 21%
  • average deal size has declined by 32.4%, to US$61.1 million
  • for the first time since 2005, companies in growth/expansion stage attracted the lion's share of private equity capital, accounting for 50% of the US$42.2bn
  • commitments to buyouts slipped to US$20.1bn, a far cry from the US$37.4bn for 2006
  • India led in recording the largest aggregate deal value, at US$9.9bn, a fraction ahead of the US$9.5bn garnered by China

Divestments

  • 380 divestment processes known to have been initiated, double that for 2006
  • US$17.3bn of realised capital recorded
  • Medium IRRs for realised capital surged to 67%, compared to 51% for 2006
  • South Korea led in divestment performance, where investors were able to realise US$4.8bn, representing 27.7% of the returned capital.