PE sees exit multiples in India

Blackstone sold its 66.25% stake in the Mumbai-based business process outsourcing company to Serco, a British support-services firm, for up to $630 million. The US buyout firm has realized a significant return on its investment, having injected a total of $260 million into Intelenet. Blackstone is thought to have purchased its majority stake in the company for less than $200 million through a management buyout in June 2007, and then made subsequent investments. Barclays also held a stake in Mumbai-based Intelenet throughout Blackstone's tenure.

The sale has been touted as private equity firm's first major result in India since setting up shop there in 2006. Reports suggest that Blackstone has committed $1.7 billion worth of investments over the ensuing five years, purchasing stakes in companies such as Moser Baer Energy, Dili Group, Gateway Rail Freight, CMS Computers and Nagarjuna Construction.

Blackstone's windfall comes the same week as firms including SAIF Partners and Clearwater Capital also neared lucrative exits. According to local reports, SAIF is in the process of selling half of its 2.7% stake in electrical lighting maker Havells India, with a target return of more than 3x. Clearwater, which bought a 33% stake in Sayaji Hotels for $10 million five years ago, has unloaded 2.85% of its holding in the open market for $1.5 million. It is the PE firm's third partial exit from Sayaji since 2007 and it has so far recouped $5 million of the initial investment by divesting just 5% of its holding, according to Rob Petty, managing principal and co-founder of Clearwater.

"I think this is a good example of the maturing nature of the Indian private equity market, where value-added private equity partners that have been involved with companies for several years are beginning to realize value in their marketplace," Petty tells AVCJ. "This is a healthy thing for the Indian market on the whole and its exchange."

Petty cautions that private equity in India still has some way to go before reaching maturity, but he sees the recent healthy returns as a significant step forward - a sentiment echoed by others. In January, India's Business Standard projected that there would be a record number of private equity and venture capital exits in 2011. Separately, Nomura announced last week that approximately $5 billion worth of Indian real estate alone will be exited by private equity within three years.

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• Topics
• South Asia
• Exits
• Support services
• The Blackstone Group
• Clearwater Capital Partners
• Robert Petty