A few lucky deals are holding firm in the profit zone, according to data compiled by Delhi-based research firm SMC Capital.
The market turmoil has wreaked havoc on investors over the past 15 months, leaving portfolios crimped, often beyond recognition.
Predictably, private equity investments in listed companies have suffered tremendous losses, too.
Amidst all the gloom and bloodletting, however, a few lucky deals are holding firm in the profit zone, according to data compiled by Delhi-based research firm SMC Capital.
In 2008, there were a total of 30 private investments in public enterprises (PIPE deals, meaning investments in listed companies), of which only one is in profits. Nalanda Capital has generated a return of 11.30% on its $21.42 million investment in SunTV Network.
As such, the number of private equity deals during 2008 was less than half those struck the previous year.
PIPE deals in 2007 numbered 63, of which about seven have proved profitable. Of these seven, three each were in real estate and banking & financial services, and one in manufacturing.
Together, the 93 deals made over 2007 and 2008 have lost about $3.29 billion vis-à-vis their total investment of $6.96 billion, indicating a current mark-to-market (MTM) return of (-)47.27%.
In percentage terms, however, only a couple of these deals are doing reasonably well. The highest return of 42.77% was generated by FMO’s investment in non-banking finance company Magma Fincorp, while ICICI Venture’s investment of $44.57 million in Centurion Bank of Punjab, which was taken over by HDFC Bank, gave 19.36%.
Though Temasek Holdings’ investment in Bharti Airtel was profitable by 13.02% and Orient Global earned 8.83% from its investment in India Infoline, the total amount invested in terms of dollars shows a negative return as the dollar has moved in the opposite direction since the investments were made.
“Normally, we expect some deals to be extremely profitable so that they can help us balance the portfolio in case a deal goes sour. But the market conditions have been such that the situation has been the reverse. Even the rare deal that has been profitable hasn’t provided much support,” said a PE firm’s managing director who did not wish to be named.
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