India’s IPO pipeline

With the S&P BSE Sensex Index up nearly 25% year-to-date, Gaja is one of a number of PE players looking to take portfolio companies public. Of the 13 draft offer documents that have been filed with the Securities and Exchange Board of India (SEBI) since April, seven have private equity investors, some of whom have been holding stakes for as long as Gaja has in CL Educate. One of these, GMR Energy, has already shelved its offering.

AVCJ Research has records of two successful PE-backed IPOs this year. Snowman Logistics, a cold chain unit of Gateway Distriparks, raised $33 million in late August. Norwest Venture Partners and International Finance Corporation saw their holdings become liquid but neither sold any shares in the IPO. Sharda CropChem earlier raised $58 million, allowing Henderson Equity Partners to exit its six-year-old investment.

The weak climate for PE-backed IPOs in India in recent years feeds into the broader disappointing exits picture. In 2010, a total of 50 offerings raised proceeds of $2.3 billion, but it has been largely downhill ever since, with four IPOs generating just $214 million last year.

Overall PE exits stand at $3 billion so far in 2014, trailing each of the previous two years when the 12-month total surpassed $5 billion. These are the highest totals on record - and public market exits of previously listed companies contributed a sizeable amount - but they remain disappointing given the $36.7 billion that was deployed in the country between 2006 and 2008, which should be ripe for realization.

It remains to be seen if an influx of IPOs can help redress the balance. But any success stories that can be held up as evidence of new Prime Minister Nahenrda Modi reviving India's flat-lining economy would be succor to private equity firms on the fundraising trail. AVCJ's calculations indicate that a handful of high-profile GPs are either in the market or expected to return with new funds over the next year. LPs will scrutinize past exits, of any variety, closely.

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• Topics
• South Asia
• Exits
• India
• Exit
• IPO