Asia’s Private Equity News Source avcj.com November 26 2013 Volume 26 Number 45 EDITor’s ViEWPOINT Positive signs as Indian private equity seeks to put the past behind it Page 3 NEWS AD Capital, Baring Asia, DCM, Everstone, Exhilway, GIC, GGV, GREE Venture, HighPoint, ICG, JAFCO, KKR, Morningside, Nomura, Oaktree, Odyssey, Phillip Private Equity, Risa, Shunwei Page 4 INDUSTRY Q&A Milestone Capital’s Rubi Arya on why she stuck Unlocking buyouts with the business and where it’s going Private equity firms track India’s emerging control deal opportunities Page 7 Page 15 FOCUS FOCUS From field to shelf Unwilling investors? Updating India’s agricultural supply chain Page 10 LPs’ faith in Indian managers is still weak Page 13 Pre-cONFERENCE ISSUE AVCJ PRIvaTE EQUITY AND VENTURE CAPITAL FORUM INDIA 2013 Anything is possible if you work with the right partner Unlocking liquidity for private equity investors www.collercapital.com London, New York, Hong Kong EDITor’s ViEWPOINT [email protected] Managing Editor Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 Mirzaan Jamwal (852) 3411 4821 Light at the end Winnie Liu (852) 3411 4907 Creative Director Dicky Tang Designers Catherine Chau, Edith Leung, Mansfield Hor, Tony Chow Senior Research Manager of the tunnel Helen Lee Research Manager Alfred Lam Research Associates INDIAN PRIvaTE EQUITY HAS TAKING A depressed rupee rate is factored in. Herbert Yum, Isas Chu, beating in recent years. As the excesses of the GPs are also spending time focusing on Jason Chong, Kaho Mak industry’s overcrowded GP population catches returning capital to investors. A total of 82 exits Circulation Manager up with the realities of a sluggish economy valued at $4.2 billion have been recorded since Sally Yip Circulation Administrator and a weakening currency, it is no surprise that January, which means last year’s total of just Prudence Lau fundraising has been slower in the last few years. under $5 billion is within reach. Manager, Delegate Sales A lot of the troubled GPs, many whom Of course, we should note that there is a Pauline Chen probably shouldn’t have been in the PE business bit of double counting as quite a few of these Director, Business Development in the first place, find they are unable to attract transactions have an element of sponsor- Darryl Mag new capital commitments and many are now to-sponsor in them. Deals such as Hexaware Manager, Business Development consigned to a slow death. Consolidation is Technologies (ChrysCapital Partners to Baring Anil Nathani, Samuel Lau inevitable. Private Equity Asia) and Shriram Transport Sales Coordinator AVCJ Research figures confirm this. From Finance (TPG Capital to Temasek Holdings) Debbie Koo the highs in 2008, when 60 India-focused funds appear in both the investment and exit totals. Conference Managers raised in excess of $9.5 billion, the drop-off has The numbers seem to say what many local Jonathon Cohen, Sarah Doyle, Zachary Reff been relentless. So far this year, 19 new vehicles PE professionals having been telling the market: Conference Administrator have raised just over $1.7 billion. For those Indian private equity is in better shape than the Amelie Poon Conference Coordinator with the luxury of dry powder, it is a good time market gives it credit for. Fiona Keung, Jovial Chung to invest: they are fewer in number, face less As one GP put it to me, “India is a long and Publishing Director competition and should, in theory, secure assets bumpy road. It eventually gets there but it takes Allen Lee at good valuations. a lot longer than you expect.” So there will almost Managing Director This is especially true for US dollar- certainly be more bumps in the road, but with Jonathon Whiteley denominated funds that can take advantage of less competition and reasonable valuations, the the weaker rupee, assuming they are confident it current vintage should have the makings of a will remain stable. good one. It appears those still in the market are already taking advantage of the conditions. Almost $7.2 Incisive Media billion has been deployed across 353 transactions Allen Lee Unit 1401 Devon House, Taikoo Place over the first 11 months of 2013 – that’s in line Publishing Director 979 King’s Road, Quarry Bay, Hong Kong with recent years and probably more if the Asian Venture Capital Journal T. (852) 3411-4900 F. (852) 3411-4999 E. [email protected] India private equity fundraising, investment and exits URL. avcj.com Beijing Representative Office 12,000 No.1-2-(2)-B-A554, 1st Building, No.66 Nanshatan, Chaoyang District, Beijing, 10,000 People’s Republic of China T. (86) 10 5869 6203 8,000 F. (86) 10 5869 6205 E. [email protected] 6,000 4,000 US$ million The Publisher reserves all rights herein. Reproduction in whole or in part is permitted only with the written consent of 2,000 AVCJ Group Limited. ISSN 1817-1648 Copyright © 2013 0 2008 2009 2010 2011 2012 2013YDT Fundraising Investments Exits Source: AVCJ Research Number 45 | Volume 26 | November 26 2013 | avcj.com 3 NEWS Baring Asia backs Giant owns two office buildings in Beijing’s China AUSTRALASIA Central Place. A total of 439.5 million share units Interactive take-private will be made available under the offering, at Australia’s Ansell buys PE- Baring Private Equity Asia is supporting a HK$3.81-4.04 apiece. AD Capital is owned by the management buyout of Chinese online game Development Bank of Japan and Asuka Asset backed glove maker developer Giant Interactive Group that values Management. US-based Odyssey Investment Partners has the New York Stock Exchange-listed company agreed to sell BarrierSafe Solutions International, at approximately $2.8 billion. If the deal goes Morningside, GGV, Shunwei a provider of disposable gloves, to Australia’s through it would be the second-largest PE- Ansell for approximately $615 million. The backed take-private of a US-listed Chinese invest in Kingsoft acquisition will be funded by a $300 million debt company after Focus Media. Kingsoft Office Software, an office suite that facility and the sale of new shares through a A consortium led by Baring Asia and Yuzhu competes with Microsoft Office, has received private placement of A$338 million ($308 million) Shi, Giant’s chairman, are offering to buy all $50 million in funding from Morningside and a share purchase plan of as much as A$100 Technologies, GGV Capital and Shunwei China million. Internet Fund. The office solutions provider, which recently opened its North American Tax office warns foreign headquarters in Palo Alto, will use the capital to expand its global partnerships with major investors on compliance original equipment manufacturers, software The Australian Taxation Office (ATO) has written developers and service. to 130 private equity firms offering to “assist with their compliance” as it scrutinizes the pipeline of CBC, Sichuan Changhong to upcoming IPOs to ensure foreign investors don’t avoid paying local tax. The ATO warned that if the launch $41m internet fund ATO concludes a particular investor is a capital China Broadband Capital Partners (CBC) and flight risk, and appropriate reassurances are not Sichuan Changhong Electric, a Chinese electric provided, it may take legal action to freeze assets. outstanding American Depository Shares for goods maker, plan to launch a RMB250 million $11.75 apiece in cash. This represents a 21% ($41 million) venture fund to invest in the cloud KKR’s Bis Industries premium to the volume-weighted average computing, big data, smart phone and internet price on Giant’s previous close. The consortium industries. The launch of the fund is a part of acquires Powertrans currently owns around 47.2% of Giant. The Changhong’s “smart home” business plan. The KKR-held Australian mining logistics company consortium plans to finance the acquisition with fund will mainly invest in companies that can Bis Industries will buy mining haulage systems a combination of debt and equity capital. improve Changhong’s supply chain systems. operator Powertrans for A$30 million ($27.46 Susquehanna Asia Investment previously million). The effective purchase price is A$20 committed $50 million to Giant in August 2007, China to modify IPO million, plus an additional A$10 million for ahead of the company’s IPO, which raised $886 inventory and work-in-production, which is million in October of the same year. Standard approvals system expected to be utilized within the operations Chartered Private Equity invested $25 million China will move towards a registration-based of Bis or otherwise monetized in the next 12 through the IPO. system for IPOs in place of the current approval- months. The transaction will be funded from Founded in 2004, Giant focuses on massively based system. This is intended to make it easier existing available debt facilities. multiplayer online role playing games and for companies, especially smaller ones, to raise currently operates 13 titles, including the ZT capital. Under the approval system, listing HighPoint Capital invests in Online 1 Series, ZT Online 2, Elsword and World applicants must meet certain CSRC-set revenue of Xianxia. and profit requirements. The approach has been Brand New Media criticized because state-owned enterprises are HighPoint Capital has acquired a significant often allowed to jump the queue. minority shareholding in Brand New Media Capital Management are two of 10 cornerstone (BNM), a Sydney-headquartered business that investors that will cover up to 44% of China Cinda DCM, Bertelsmann commit runs digital channels for brands and broadcasters. Asset Management Corp’s IPO. The company, Its partners include Seven West Media in originally set up to absorb non-performing $10m to China’s Ucloud Australia, New Zealand’s national broadcaster loans (NPLs) from China’s Big Four state-owned Ucloud, a Chinese cloud computing service TVNZ and the Singapore government.