The trend of PE exits via IPOs keep growing
The financial year 2014-15 is the year noted for several remarkable private equity exits via IPO routes. With Monte Carlo Fashions, a renowned private equity-backed company received regulatory clearances for IPO, 6 similar moves expected to happen very close this year, to make the current fiscal ranking highest among the past 3 years for the number of private equity exits through the IPO route.
As per the reports of Avalon Consulting, around 80,000 crore of over six-year-old PE investments are waiting to exit, helping the private equity industry to return money to the investors. The facts that have been encouraging such moves are the glittering secondary markets and revived interest in the primary market by many investors as seen by high subscriptions to some of the recent IPOs. These positive market sentiments have been encouraging many companies to follow the trend and try their hands.
Following the move of Monte Carlo, five PE companies — Ortel Communications, Uniparts India, PNC Infratech, CL Educate and ACB India are awaiting Sebi’s approval for coming out with IPOs for a partial or full PE exit.
Speaking about the returns, reports reveal that Henderson Equity Partners exited their investment in Sharda Cropchem with 2.2 times appreciation, while NSR is expected to make this twice with their investments in Ortel Communications if the if the IPO gets approval to be priced over Rs.200 per share. Gaja Capital is another investor who looks forward for 1.5 times returns, as per a latest private transaction.
Raja Lahiri, partner at Grant Thornton India comments that as the IPO market, investor’s sentiments and the PE have been witnessing a good pick-up this fiscal, this has been giving a positive impetus for companies that are preparing for IPOs in the last quarter of 2014. Gopal Jain, Managing Partner at Gaja Capital, opines that there has been a strong rally in secondary markets over the past few months. This has given a good opportunity for many private equity investors in listed companies to liquidate some of their holdings, and thereby encouraging a gradual opening of the IPO window.
The rise of BSE Sensex this year to nearly 18%, backed by the overwhelming investor sentiments, are definitely giving new hopes for companies as well as investors.
Avalon Consulting, FDI in India, FDI India, financial year 2014-15, Grant Thornton India, Henderson Equity Partners, Investments, Private Equity, Private Equity exits
