PE funds have been finding it tough to exit investments in the past couple of years as depressed markets brought down returns
The uptick in the primary markets has led to many firms backed by private equity (PE) funds lining up to go public. But some funds have more at stake than others and are eager to take the intial public offer (IPO) route to exit investments with success.
According to a Mint analysis, three funds—Norwest Venture Partners, Blackstone and IFC—have the most riding on the primary markets, with at least three portfolio firms each coming up with IPOs.
The uptick in the primary markets has led to many firms backed by private equity (PE) funds lining up to go public. But some funds have more at stake than others and are eager to take the intial public offer (IPO) route to exit investments with success.
According to a Mint analysis, three funds—Norwest Venture Partners, Blackstone and IFC—have the most riding on the primary markets, with at least three portfolio firms each coming up with IPOs.
So far this year, eight companies have completed their IPOs, while another 22 companies have filed draft IPO papers. A majority of them are PE-backed firms.
PE funds have been finding it tough to exit investments in the past couple of years as depres-sed markets brought down ret-urns and extended the lifecycle of PE investments in India.
According to a 1 July McKinsey and Co. report, the average return from exits has dropped to just 7% since 2008 compared to 21% until 2007. The average holding period of investments has gone up from 3.3 years in 2005 to 5.7 years by 2013.
According to a 1 July McKinsey and Co. report, the average return from exits has dropped to just 7% since 2008 compared to 21% until 2007. The average holding period of investments has gone up from 3.3 years in 2005 to 5.7 years by 2013.
The IPO market appears to be the best exit route for PE investors in the current scenario, said Harish H.V., partner at consulting firm Grant Thornton India Llp. “As far as PE-backed IPOs are concerned, the ones which are coming to the market are fairly large ones, where PEs have put a reasonable amount of money in the companies. Secondary exits, where possible, have already happened. Promoter buyback is not an option.
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