With increasing array of exits, private equity (PE) funds have sold shares to the tune of USD 1.17 billion in this year through their portfolio companies going public.
Private equity (PE) funds sold shares to the tune of USD 1.17 billion in this year through their portfolio companies going public, the Mint reported.
Using the data from Venture Intelligence, the newspaper reported that the value of sold shares in 2017 is around 25 percent higher than the shares worth USD 935 million sold through initial public offerings (IPOs) in 2016.
In contrast, PEs sold shares worth only USD 287 million in IPOs during 2015.
PE investors like Warburg Pincus, ChrysCapital, and Kedaara Capital, among others have made successful exits or partial exits through IPOs.
IPOs as an exit route has become quite attractive for PE players, Sumit Jalan, the co-head of India investment banking and capital markets at Credit Suisse said.
Jalan said that a strong IPO market is attracting sponsors to choose it as an exit route. Moreover, the IPO route for a PE fund has some key advantages — like it enables PE investors to “partially sell down their holding, while continuing to participate in any upside and take advantage of favourable tax liabilities in the public market that may not be available in the private market,” he told the Mint.
“Given the buoyancy of the public markets and the liquidity in the system, IPOs seem to have become a favoured route for PE/VC investors to exit,” said Prashant Gupta, partner & national practice head, capital markets, Shardul Amarchand Mangaldas and Co.
This year was a record one for the IPO market in India wherein companies raised Rs 65,923 crore till November. In 2016, IPOs raised around Rs 26,493 crore in 2016.
The buoyancy of the IPO market and reforms introduced by the government would continue to encourage PE-backed IPOs, Gupta told the newspaper. But he also cautioned that ahead of the 2019 general elections, markets might become more volatile next year.
