Marked-to-market value of 75% PIPE deals giving negative returns
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K.Karthik Raja
Jul 8, 2008, 8:27:03 AM7/8/08
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Marked-to-market value of 75% PIPE deals giving negative returns
Tuesday, Jul 8
.
NEW DELHI - A whopping 75% of private investments in public equity
(PIPE) deals of 2007 have gone sour for their investors, according to
a study by Delhi-based NEXGEN Capitals Ltd.
An analysis of 63 PIPE deals stuck last year shows that
infrastructure sector has been the worst performer.
In 2007, the infrastructure sector saw PIPE deals worth 59.12 bln
rupees but the marked-to-market value of these transactions has eroded
nearly 50% to 29.67 bln rupees as on Jul 7.
NEXGEN Capitals, which is the merchant-banking arm of Delhi-based
brokerage SMC Global Securities, said total investment of 218.57 bln
rupees in PIPE deals last year stood at 192.23 bln rupees, down 16.7%.
The 63 PIPE deals cover information technology and information
technology
enabled services, infrastructure, healthcare, telecom, retail, media,
manufacturing, real estate and banking, financial services and
insurance
sectors.
Since the middle of the January, the benchmark indices have lost
nearly
37%.
From a life-time high of 21206 on Jan 10, the 30-share Sensex
closed at
13349.65 Tuesday.
Similarly, the 50-share Nifty, which scaled a life-time high of
6357.10 on
Jan 8, closed at 3988.55.
.
WORST DEAL
In December 2007, around 10 private equity investors including
Eton Fund
LP, T Rowe Price, Deutsche Asset Management and Citigroup had invested
39.65
bln rupees in GMR Infrastructure at 240 rupees per share in a
qualified
institutional placement.
The current mark-to-market value of the investment had plummeted
63% to
14.63 bln rupees.
Share of GMR Infrastructure closed at 86.10 rupees on the National
Stock
Exchange, down 2.8% from its Monday close.
Another PIPE deal which shows the impact of volatile market
conditions is
that of Great Offshore Ltd.
U.S.-based private equity company The Carlyle Group had bought a
4.99%
stake in Great Offshore for 1.63 bln rupees at 860 rupees per share.
The current marked-to-market value of the investment in Great
Offshore has
fallen 45% to 901.6 mln rupees.
However, there is a silver lining to the PIPE deals story in
India.
Banking, financial services and insurance, telecom, and retail
are the
sectors which seemed to have survived the market meltdown.
Retail was the top performer with returns of 41%.
The PIPE deals in the retail sector witnessed a total investment
of 2.15
bln rupees with the current value of the transactions of 3.03 bln
rupees.
Industry officials are also buoyant about the potential of PIPE
deals in
the near future
"Going forward, we are likely to see more of PIPE deals across
sectors
rather than just private equity. The valuations have become more
attractive,"
said Ajay Relan, managing director, Citigroup Venture Capital
International.
"Despite the turmoil in stock markets, a lot of activity is
expected on
the PIPE deals front, especially in the infrastructure space," said
Axis
Private Equity Ltd Chief Executive Officer Alok Gupta.
.
Following are the PIPE deals in the infrastructure sector:
No Investor Investee Total investment Current
Returns
(in rupees)
MTM (%)
(in rupees)
1. Aventic Partners GMR Infrastructure 39.65 bln 14.63 bln
-63.10
Citigroup
Canara Bank
Credit Agricole,
Deutshe Asset,
Eton Park,
Kotak Pvt Equity,
SBI, UBS,
T.Rowe Price Group
2. Carlyle Group Great Offshore 1.63 bln 901.6 mln
-44.88%
3. Blackstone Group Nagarjuna 6.15 bln 4.01 bln
-34.79%
Construction
4. Citigroup Venture Subhash Projects 1.74 bln 1.32 bln
-24.08%
Capital and Marketing
5. Warburg Pincus, Punj Lloyd 8.14 bln 6.83 bln
-15.98%
Avenue Capital,
Moore Capital,
Blackstone,
DKR Oasis,
Kingdom Capital
6. IFC Gujrat State 1.07 bln 1.09
bln 2.46%
Petroleum
7. CLSA Capital Sanghvi Movers 726 mln 866
mln 19.39%
.
Following were the PIPE deals in the retail sector:
.
No Investor Investee Total investment Current
Returns
(in rupees)
MTM (%)
(in rupees)
1. New Vernon, Fidelity, Provogue India 1.46 bln 2.88
bln 97.07%
Genesis Capital,
India fund Inc,
Nailsfield Ltd,
Artis Capital
2. Nalanda Capital Vaibhav Gems 500 mln 97.6 mln
-80.52%
3. Fidelity Intl House of Pearl 153.1 mln 33 mln
-78.46%
Fashions
4. Bennett Coleman & Co Archies 39.9 mln 25.9 mln
-35.11%
End
Tuesday, Jul 8
.
NEW DELHI - A whopping 75% of private investments in public equity
(PIPE) deals of 2007 have gone sour for their investors, according to
a study by Delhi-based NEXGEN Capitals Ltd.
An analysis of 63 PIPE deals stuck last year shows that
infrastructure sector has been the worst performer.
In 2007, the infrastructure sector saw PIPE deals worth 59.12 bln
rupees but the marked-to-market value of these transactions has eroded
nearly 50% to 29.67 bln rupees as on Jul 7.
NEXGEN Capitals, which is the merchant-banking arm of Delhi-based
brokerage SMC Global Securities, said total investment of 218.57 bln
rupees in PIPE deals last year stood at 192.23 bln rupees, down 16.7%.
The 63 PIPE deals cover information technology and information
technology
enabled services, infrastructure, healthcare, telecom, retail, media,
manufacturing, real estate and banking, financial services and
insurance
sectors.
Since the middle of the January, the benchmark indices have lost
nearly
37%.
From a life-time high of 21206 on Jan 10, the 30-share Sensex
closed at
13349.65 Tuesday.
Similarly, the 50-share Nifty, which scaled a life-time high of
6357.10 on
Jan 8, closed at 3988.55.
.
WORST DEAL
In December 2007, around 10 private equity investors including
Eton Fund
LP, T Rowe Price, Deutsche Asset Management and Citigroup had invested
39.65
bln rupees in GMR Infrastructure at 240 rupees per share in a
qualified
institutional placement.
The current mark-to-market value of the investment had plummeted
63% to
14.63 bln rupees.
Share of GMR Infrastructure closed at 86.10 rupees on the National
Stock
Exchange, down 2.8% from its Monday close.
Another PIPE deal which shows the impact of volatile market
conditions is
that of Great Offshore Ltd.
U.S.-based private equity company The Carlyle Group had bought a
4.99%
stake in Great Offshore for 1.63 bln rupees at 860 rupees per share.
The current marked-to-market value of the investment in Great
Offshore has
fallen 45% to 901.6 mln rupees.
However, there is a silver lining to the PIPE deals story in
India.
Banking, financial services and insurance, telecom, and retail
are the
sectors which seemed to have survived the market meltdown.
Retail was the top performer with returns of 41%.
The PIPE deals in the retail sector witnessed a total investment
of 2.15
bln rupees with the current value of the transactions of 3.03 bln
rupees.
Industry officials are also buoyant about the potential of PIPE
deals in
the near future
"Going forward, we are likely to see more of PIPE deals across
sectors
rather than just private equity. The valuations have become more
attractive,"
said Ajay Relan, managing director, Citigroup Venture Capital
International.
"Despite the turmoil in stock markets, a lot of activity is
expected on
the PIPE deals front, especially in the infrastructure space," said
Axis
Private Equity Ltd Chief Executive Officer Alok Gupta.
.
Following are the PIPE deals in the infrastructure sector:
No Investor Investee Total investment Current
Returns
(in rupees)
MTM (%)
(in rupees)
1. Aventic Partners GMR Infrastructure 39.65 bln 14.63 bln
-63.10
Citigroup
Canara Bank
Credit Agricole,
Deutshe Asset,
Eton Park,
Kotak Pvt Equity,
SBI, UBS,
T.Rowe Price Group
2. Carlyle Group Great Offshore 1.63 bln 901.6 mln
-44.88%
3. Blackstone Group Nagarjuna 6.15 bln 4.01 bln
-34.79%
Construction
4. Citigroup Venture Subhash Projects 1.74 bln 1.32 bln
-24.08%
Capital and Marketing
5. Warburg Pincus, Punj Lloyd 8.14 bln 6.83 bln
-15.98%
Avenue Capital,
Moore Capital,
Blackstone,
DKR Oasis,
Kingdom Capital
6. IFC Gujrat State 1.07 bln 1.09
bln 2.46%
Petroleum
7. CLSA Capital Sanghvi Movers 726 mln 866
mln 19.39%
.
Following were the PIPE deals in the retail sector:
.
No Investor Investee Total investment Current
Returns
(in rupees)
MTM (%)
(in rupees)
1. New Vernon, Fidelity, Provogue India 1.46 bln 2.88
bln 97.07%
Genesis Capital,
India fund Inc,
Nailsfield Ltd,
Artis Capital
2. Nalanda Capital Vaibhav Gems 500 mln 97.6 mln
-80.52%
3. Fidelity Intl House of Pearl 153.1 mln 33 mln
-78.46%
Fashions
4. Bennett Coleman & Co Archies 39.9 mln 25.9 mln
-35.11%
End
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