The High-Profile Exits Of 2006

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Warburg Pincus, India’s top private equity investor, shares the stage for high-profile exits in 2006 with Singapore-based Newbridge Capital and Temasek Holdings. While some reports suggest that overall the Indian private equity market earned investors over $2 billion on exits, two deals clearly marked 2006 — Warburg’s partial exit from Mumbai-based BPO WNS Global Services through the latter’s IPO and the $736-million acquisition of Matrix Labs by US-based Mylan Laboratories (Newbridge and Temasek sold their 40 per cent stake in Matrix).
There were other notable exits as well. EDS acquired Mumbai-based IT services firms MphasiS for $380 million and gave Baring Private Equity a long-awaited exit. Towards the end of the year, Infoedge (promoters of jobs portal Naukri) surprised the bourses with a spectacular public debut — a Rs 170 crore IPO, oversubscribed 55 times. What’s interesting about all these deals is the fact that unlike previous years, exits through ‘trade sales’ or M&A transactions have been balanced by IPO-led exits. It is a trend that started in 2005 and has gained momentum in 2006.

In the next 12 months, private equity investors will be looking to balance the scales further between IPO-led and trade sale exits. IPO-led exits are typically the preferred exit route. However, till 2005, trade sales dominated exits in India — nearly 90 per cent of exits — because conditions for liquidity through public markets were not conducive. 2005’s biggest exit, in fact, was a trade sale — Warburg sold its remaining 5.65 per cent stake in Bharti Tele-Ventures to Vodafone for $847.5 million. That has changed in the past year and with IPO-led exits now picking up PE players will also look at doing more non-PIPE (private investment in public enterprise) deals in the coming months.




The current year should be another one for big-ticket PE investments in India. The PE market closed 2006 with over $2 billion in investments, according to Thomson Financial (see ‘BW-Thomson Financial PE Roundup’). PricewaterhouseCoopers put the investment numbers for India at $5 billion for 2006. This took into account deals such as Kohlberg Kravis Roberts’ $900 million acquisition of Flextronics’ Indian IT operations. Bangalore-based Venture Intelligence put the numbers even higher at over $7 billion.