Tiger Global, founded by billionaire Chase Coleman, has become the largest investor in Indian e-commerce. With partner Lee Fixel, it is building a portfolio of Indian companies that can rival US giants such as Amazon or Uber.
Tiger Global was not the only financial investor pumping in money at full throttle. A look at the top 10 buyers in merger and acquisition (M&A) deals reveals the year gone by saw financial investors overtaking strategic buyers. Seven private equity (PE) funds — SoftBank, Temasek, Steadview Capital, Centrebridge Partners, Sequoia Capital and Falcon Edge Capital, together with Tiger Global — invested as much as $10.3 billion (Rs 68,300 crore) in 2015.
“Everyone is expecting growth to revive. So, most companies are holding, and willing to divest only minority stakes,” says Rashesh Shah, chairman of Edelweiss Group, the financial services entity.
While e-commerce was the favourite pick for Tiger Global, SoftBank and Sequoia Capital, other PE entities invested across sectors. Singapore-based sovereign fund Temasek invested $1.4 billion (Rs 9,300 crore) in the year, its largest till date, buying stakes in Sun Pharmaceutical and Glenmark (in pharmaceuticals), Crompton Greaves (engineering) and Oberoi Realty.
“The year saw stress across sectors, leaving no buyout appetite for strategic players,” says G Chokkalingam, managing director, Equinomics Research and Advisory.
The value of strategic deals in the top ten was $6.75 billion (Rs 4.47 lakh crore). After Vedanta, in the top ten buyers’ list for the year, another strategic buyer is US-based Enterprise Product Partners, which bought EFS Midstream, a pipeline subsidiary in the US owned by Reliance Industries and its shale gas joint venture partner, Pioneer Natural Resources, for $2.15 billion (Rs 1.42 lakh crore).
The third largest strategic deal for the year was American Tower Company buying $2 billion (Rs 1.32 lakh crore) of stake in Viom Networks, in the largest inbound acquisition of the year.
“Most of the strategic deals in the year were also a sellout under stress and it was natural for financial investors to take a lead,” he says.
In 2015, deals (including M&A, investment and buyout) were up six per cent to $45 bn, against $42.4 bn in 2014. Though a five-year high, on the back of robust PE investment, this was much below the highs of $71 bn in 2007 and $67 bn in 2010. The dip in deal flow, especially the strategic ones, has made making money relatively more difficult for investment bankers.