Opportunities in Private equity

Opportunities in Private equity

May 2008

Agenda

Introduction to Private Equity (PE)

PE Growth Story in India

Benefits of Private Equity

Process of PE Investment

ICICI Group : Value proposition & credentials

Indian PE success stories

Introduction to Private Equity

Role of Private Equity - To help ambitious entrepreneurs to achieve success - fuelled by capital, business expertise and improved governance.

Private equity is medium to long term finance provided in return for an equity stake in growth oriented companies, which could be both listed and unlisted.

Private equity investment is a transformational, value-added ,active investment strategy

Agenda







Growth of the asset class

Growth of Private Equity in India (2002 – 2007)

US$17.3bn

US$7.5bn

US$2.2bnUS$0.9bn US$1.5bnUS$0.9bn

356

145

635161

299

2002 2003 2004 2005 2006 2007

Source: AVCJ.

– Number of deals increased more than 5 folds since 2002

– Value of deals increased more than 18 folds to reach US$ 17.3 billion in 2007

6

Considerable diversification across industry

Number of

Deals

2002 2007

Value of

Deals

Telecom20%

Computer Related

19%

Information Technology 18%

Medical 10%

Financial Services 8%

Manufacturing 7%

Services Non-Financial 7%

Others 11%

Financial Services

35%

Telecom21%

Information Technology

14%

Manufacturing 10%

Computer Related 10%

Medical 5%

Others 5%

Financial Services

20%

Information Technology

13%

Transportation/Distribution 9%

Medical 8%

Telecom 7%

Computer Related 6%

Electronics 5%

Service Non-Financial 5%

Others 27%

Financial Services

34%

Telecom 24%

Construction 5%

Infrastructure 5%

Transportation/Distribution 5%

Medical 4%

Others 23%

Source: AVCJ.

7

Growth across segments

Number of

Deals

Value of

Deals

2002 2007

Buy-outs (MBO/MBI/LBO)

3%

Expansion/ Growth Capital

66%

PIPE Financing

13%

Start-up/ Early Stage

13%

Turnaround/ Restructuring 3%

Mezzanine/Pre-IPO 2%

Expansion/ Growth Capital

52%PIPE Financing

35%

Start-up/ Early Stage

6%

Turnaround/ Restructuring 4%

Buy-outs (MBO/MBI/LBO) 2%

Mezzanine/Pre-IPO 1%

Mezzanine/ Pre-IPO 9% Expansion/

Growth Capital

49%

Start-up/Early Stage

21%

PIPE Financing

18%


Seed/R&D 1%

Expansion/Growth Capital

41%

PIPE Financing

32%

Start-up/Early Stage

16%


Mezzanine/ Pre-IPO 5%

Source: AVCJ.

Agenda








Access to financial capital

- Expansion capital / Acquisition capital

- Restructuring business – MBOs, divestment, consolidation

- Restructuring of balance sheet

Business Development

- Providing networking linkages across the globe

- Helping develop new product lines and entering new markets

-Active support to secure domestic & global business partners

Access to globalBest

Practices

- Ensuring high standards of corporate governance

- Facilitating proper MIS systems for control and monitoring

- Ensuring maintenance of proper organizational structure

- Balance sheet management

Strategicvalue

addition

- Providing Risk management tools

- Facilitating outpacing of Competition

- Conceiving and conceptualizing New business line

- Gearing up for IPO

Agenda








PE Investment PE backed IPO ~ INR 1700 cr PE Investment in 2000 PE backed IPO ~ INR 130 cr

0

100

200

300

400

500

600

700

800

2004 2005 2006 2007

INR

cro

res

Sales EBIT Profitability

PE Investment of INR 140 cr

ABG SHIPYARD

PE backed IPO ~ INR 128 crPE Investment in 2003

Source: moneycontrol.com

SHOPPER'S STOP

0100200300400500600700800900

1000

2004 2005 2006 2007

INR

cro

re


INR

cro

re

PVR CINEMA

0

50

100

150

200

250

2004 2005 2006 2007


INR

cro

re

SUZLON

0

1000

2000

3000

4000

5000

6000

2004 2005 2006 2007


Agenda







Pre-IPO Placements

Strategic financial advice

Mezzanine/ hybrid

financing

Valuation and pricing

analysis

Debt syndication

Private equity

Mergers, acquisitions

and disposals

Deal structuring

Management Buyouts

Listed company Financing

Debt/ Structured Financing

Venture/ Developmental Capital

Takeovers

ValuePublic to Private

transaction

ICICI

Full spectrum of services throughout the corporate development cycle

ICICI Group : Value proposition (1/2)

ICICI Group: Value proposition (2/2)

IB services portfolio

HNIs / Family offices / Financial Institutions : Middle East, UK, US, South Africa, Singapore

+

Access to prominent India dedicated PE funds / Financial institutions / HNIs

Investment banking capabilities

PE syndication, structured finance and advisory, acquisition funding

ICICI Group companies

ICICI Securities for Capital Market access, ICICI Ventures

Investors Base

Integrated Investment banking services, with access to best of breed global and domestic investors, offering value throughout the lifecycle of company

ICICI Group: Credentials ( 2004 – 2007 )

McLeod Russell

Acquisition of Doom Dooma Tea

Company

USD 17 million

Advisor

Sale of assets and financial

restructuring

Advisor

Acquisition of spirits business of

Shaw Wallace

USD 300 million

Advisor

Acquisition of spirits business of

Shaw Wallace

USD 300 million

Advisor

Employee buyout of Tata Tea plantations

USD 13 million

Advisor

Acquisition of Corus Group PLC

USD 12.8 billion

Financing

Acquisition Hansen Technologies

USD 565 million

Structuring & Financing


Acquisition of Whyte & Mackay

USD 1,188 million

Advisory & Financing

Acquisition of Whyte & Mackay

USD 1,188 million

Advisory & Financing

Acquisition of REpower

USD 1,560 million


Acquisition of a South African

tyre manufacturer

USD 62 million

Guarantee facility

Acquisition of Keyline Brands

GBP 18 million

Sole Arranger

Employee buyout of Tata Tea plantations

USD 13 million

Advisor

Acquisition of Negma Labs

USD 266 million



Art Auction Company

Fresh Equity Issue

USD 8.5 million

PE Syndication from HNI investors

Equity Broking company

Management Buy Out

USD 11 million

Coinvestment with PE fund

Infrastructure Company

Fresh Equity Issue

USD 28 million

PE Funding

Power Transformer Manufacturing

Company

Fresh Equity Issue

USD 18.20 million

PE Funding

Garment Manufacturer

Fresh Equity Issue

USD 5 million

PE Funding


39%19%

6%3%

28%

Capital Goods Consumer Goods Chemicals

Healthcare Electronics Auto/ Ancillaries

Others Hospitality Software

M&A Deals by Industry (2004-07) M&A Deals by Geography (2004-07)

18%

14%13%

7%

6%3%

16%

6%

12%

Germany US Norway ScotlandDomestic Belgium France EgyptUK Ireland Uzbekistan SwitzerlandSA Netherlands Australia Italy

Agenda







Process of PE investment : Indicative timeline (3–6 m) After a formal mandate

1 2 3 4 5 6 7 8 9 10 11

Data collection and IM preparation

Marketing and prospecting investors

Concalls and meetings conducted with potential investors

Discussions over Valuations and rights

Term sheet

12

13

Shareholder/share purchase agreement

14

Commercial and Legal DD

Agreements discussion

Funding disbursement

No of weeks

Thank you

Contact information Amit Ratanpal, [email protected] Aishwarya Parthsarthy, [email protected], +91 9833245675 Himani Bhalla, [email protected], +91 9867596685 Purna Mishra, [email protected] +91 9833299827

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Opportunities in Private equity