Private equity, venture capital exits drop 86% in Q2

Private equity and venture capital firms have witnessed an 86 per cent drop in exits in the quarter ended June 2019. The firms realised about $2.43 billion (across 39 deals). The second quarter of 2018 was dominated by the $12 billion exit of e-tailer Flipkart (via acquistion of Walmart). For the six months period (January June 2019), PE firms have realised $4.09 billion (across 85 deals) compared to $19.59 Billion (across 145 deals) in the same period last year. PE investors got 41 profitable exits compared to 77 such exits in the same period in 2018.

According to Venture Intelligence data, of the total exit value during the second quarter of 2019, $1.43 billion represented complete exits from portfolio companies, while the remaining were partial exits. These figures include exits from VC type investments and exclude exits in the realty sector.

Top Exits by Size

The largest PE exit (in value terms) reported during the second quarter of 2019 was the sale of shares worth $377 million by PE investors in Medanta Medicity to Manipal Hospitals for $836 million (around Rs 5,800 crore). While Carlyle holds a 27 per cent stake in Medanta, Temasek owns 18 per cent stake in both Medanta and Manipal.

The second-largest exit by size was the partial exit of Bain Capital and GIC from US-listed BPO firm GENPACT by selling an about 5.26 per cent stake for $360 million. The investors continue to hold a 14.56 per cent stake in the company post the latest sale.

In April 2019, Malaysia’s state-owned oil and gas company, Petroliam Nasional Berhad (Petronas) acquired rooftop solar power producer Amplus Energy Solutions for $389 million (around Rs 2,700 crore). New York-based I Squared Capital held an over 90 per cent stake in Amplus, while the balance was held by the management team led by Amplus founder, Sanjeev Aggarwal.

KKR had offloaded its shares in HDFC for about $267 million for about 15 per cent gain, 15 months after acquiring them via a preferential share allotment (in Januar 2018). Warburg Pincus sold another 3.15 per cent stake in the country’s largest private general insurer, ICICI Lombard General Insurance Company, to raise about $227 million. The investor continues holding a 2.7 per cent stake in the company. In April 2019, Carlyle made a part exit from Metropolis Healthcare, as part of the latter’s IPO, realising $94 million.

In June 2019, Japan-based Fuji Electric entered into an agreement with Peepul Capital to acquire shares of Chennai-based power electronics manufacturer Consul Neowatt Power Solutions (earlier known as Consul Consolidated) for $104 million (Rs 720 crore).

Exits by Profitability

Venture Intelligence data shows that during the second quarter of 2019, PE investors obtained 41 profitable exits compared to 77 such exits in the same period in 2018. Of these, 9 exits fetched 3x or higher returns (compared to 30 such exits in Q2 2018).

In April 2019, Steadview Capital invested $60 million in Mumbai-based sports fantasy startup Dream11 at a $1.1 billion valuation. The deal gave multibagger returns to early backers Kalaari Capital, Think Investments and Multiples Private Equity. Kalaari and Think Investments backed Dream11 first in late 2014 when it was valued at around $15 million and followed with another round in 2016 which valued the company at about $50 million. Multiples invested in the company at a valuation of around $100-120 million in 2017.

TrueNorth sold its remaining shares in Aster DM Healthcare held via its Fund III and registered a 10.75x return on its investment. (It continues to stay invested in Aster DM from its Fund IV and Fund V.)

In June 2019, Sixth Sense Ventures completely sold its shares held via Sixth Sense India Opportunities I in publicly listed Hindustan Foods and made a return of 9.34x on its 2.5 year old investment. (The investor continues holding stake in Hindustan Foods via its Fund II.)

Intel Capital sold a majority of its stake in IndiaMART via the company’s June 2019 IPO and realized 5.44x on its over 10 year old investment. It continues holding a 4.38 per cent stake in the company.

Exits by Industry

Healthcare & Life Sciences (with 7 exits worth $700 million) was the leading sector in terms of exit deal value during the second quarter of 2019, followed by IT & ITES (with 15 exits worth $555 million). Led by the HDFC-KKR exit, PE investors harvested $494 million (across 2 deals) from BFSI companies. Exits from BFSI companies registered a 5-quarter low in terms of volume. The energy sector provided exits to the investors worth $468 million (across 3 deals) during Q2’19.

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