Indian companies raise $17.14 Bn via PE deals

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Mumbai: Indian companies seemed to largely resort to private equity (PE) deals for fund-raising in 2007. PE deals topped the list of fund raising sources of the companies last year, much ahead of initial public offerings (IPOs), follow-on offerings and qualified institutional placements. According to data from Grant Thornton, one of the six global accounting, tax and business advisory organizations, Indian companies raised a record Rs 69,159 crore ($17.14 billion) via private equity deals in 2007. Though a booming primary market has seen most of the issues getting listed at a premium, IPOs could garner only Rs 34,213 crore ($8.5 billion) during this period. While follow-on public offering (FPO) accounted for Rs 10,962.48 crore ($2.7 billion), qualified institutional placement (QIPs) mopped up Rs 23,400 crore ($5.85 billion) in 2007. "A PE player is much more diligent while investing in a company. It can find growth stories, which, at times, retail investors cannot identify. Moreover, a PE player is willing to pay a premium to invest in a company, giving immediate liquidity to the company compared to the time taken by an IPO or FPO," said Alok Mittal, Managing Director of Canaan Partners, a PE fund. In 2007, the PE deal size was more than double the PE amount of $7.86 billion in 2006. Last year witnessed a total of 386 PE deals, mainly in the areas of real estate, infrastructure and financial services. The IT & ITeS segments topped the list with 66 deals. India was the fifth largest IPO market globally, as $8 billion was garnered by 101 primary issues. Meanwhile, buoyant secondary market has witnessed multiplied returns on IPO investments, thanks to the huge Foreign Institutional Investor (FII) inflows. DLF issue, which raised about Rs 9,187.50 crore (more than $2 billion), became the largest IPO of the year. The follow-on issue of ICICI Bank mobilized Rs 10,000 crore, being the highest ever for a secondary market offering. "Private equity as a methodology is universal for growth-oriented companies. While a company has to satisfy certain eligibility criteria for getting listed, there is no such requirement in case of a private equity deal," said Rajiv Dalal, Partner, Ernst & Young.