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Buyout Activity in India

by Kevin Neadley

  • 13 Oct 2011
  • PE

A large proportion of buyout deal activity in the BRIC economies gravitated towards India during the last 12 months. Of the 147 deals announced across this economic region during this year, 61% of these deals were in India. In terms of deal flow for the same period, India has attracted the largest amount of capital, $5.4 billion, more than double the amount of capital invested in China ($2.5 billion), three times more than Russia ($1.8 billion) and over six times the amount of capital invested in Brazil ($800 million).

During 2010 Brazil dominated the private equity-backed buyout deals market, attracting aggregate capital of $5.8 billion despite there being only 22 deals announced for this period. China too attracted a lot of activity with deal volume hitting 45 deals and aggregate investment totalling $4.5 billion. However, this year deal activity in Brazil and China has ebbed whilst all aspects of India's deals has increased – from deal volume, to aggregate deal value, to the average deal size.

Compared with last year India’s average deal size has increased by 69%, from $42.8 million seen in 2010 to $72.4 million per each deal seen in 2011 YTD. Deal volume has also spiked to 90 deals in 2011 versus 79 deals for the entire 2010 period. What’s more, India’s aggregate deal value this year has increased by 100% over last year’s figures, going from $2.7 billion in 2010 to $5.4 billion in 2011 YTD.

It is India's industrials sector that is seeing most of this attention with 26% of all announced deals being made in this sector. Other industries popular amongst PE firms are India’s business services and consumer services sectors, which account for 21% and 16% of deal volume, respectively.

The largest deal announced this year not just in India but across all BRIC economies was the private investment in the publicly listed Mumbai–based IT and business solutions company, iGATE Patni (formally Patni Computer Systems). Investors in the deal were iGate and Apax Partners who acquired a 63% stake in the business for $1.22 billion

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