PE and VC investors make a killing in the 2023 bull market
- PE investors like Softbank, Tiger Global, Bain and TPG could execute partial/full exits in 2023 due to a bull market run.
- New-age internet company stocks that have run up this year also offer exit options for strategic investors.
- Promoters have also sold off shares to the tune of ₹87,000 crore in 2023, says Kotak report.
AdvertisementPrivate equity and venture capital investors have made a killing during the Indian markets’ bull run. In over 29 large block deals, investors like Softbank, Tiger Global, Bain and TPG sold stakes in new-age internet companies as well as newly listed companies this year.
Indian stock markets have appreciated by over 7% in the last one year. The benchmark indices have also hit life-time highs multiple times during the year. New-age internet companies too have been charting a path to profitability and have been gaining value, allowing strategic investors to exit them.
The sell-off via block and bulk deals by PE investors has been broad-based during the year, says a report by Kotak Institutional Investors. But the most notable large deals have been in the new-age internet companies.
PayTM has seen the most sell-offs — with four block deals to the tune of ₹5,880 crore. Alibaba, Morgan Stanley Investment Management and Softbank were the top sellers.
Zomato, which recently announced its maiden profits, also saw three large deals in August by Softbank, Apoletto Asia and Tiger Global. Together they made around ₹1,360 crore during the sell-off.
“PE/VC investors have made exits through both the primary via IPOs, and secondary via block deals market routes. The trend of PE exits has accelerated in 2023 as PEs have used buoyant secondary market conditions to sell their holdings both in full and part to institutional (foreign and domestic) and retail investors,” said a report by Kotak Institutional Investors.
Tiger Global also sold shares in Delhivery via two deals making as much as ₹590 crore, while other mid cap companies like Restaurant Brands Asia as well as Bikaji Foods also saw strategic investors selling from the rising markets. PB Fintech also saw a share sale from Tencent.
The robust IPO market has also seen many PE and VC investors selling via offers-for-sale. “We note that offer-for-sale amounts have been significantly higher than fresh capital issuance amounts over 2018-23,” Kotak said.
In the eight months of 2023, fresh capital issuances are much lower than offer-for-sales. Very few IPOs like JSW Infrastructure and Utkarsh Small Finance Bank have been completely fresh issues.
|Company||Seller||Deal size ₹bn||Time|
|One 97 Communications (PayTM)||Alibaba||10.3||Jan-23|
|Alibaba | Morgan Stanley Investment Management||14.1||Feb-23|
AdvertisementSource: Kotak Institutional Investors
Financial services companies
Banks and the financial services sector have seen a good run all through the year, making up for the chunk of the large block deals. Investors like Bain Capital Private Equity, Integral Investments, Apax Partners and Bessemer India Capital Holdings have sold on the high.
Shriram Finance, Home First Finance Co, Five-Star Business Finance and L&T Finance Holdings have also seen share sales during the year.
|Company||Seller||Deal size ₹bn||Time|
|Restaurant Brands Asia||Everstone Capital Management||15.0||Sep-23|
|L&T Finance Holdings||Bain Capital Private Equity||9.1||Sep-23|
|Bikaji Foods International||Lighthouse Fund||1.6||Sep-23|
|Bikaji Foods International||Lighthouse Fund||1.7||Aug-23|
|Five-Star Business Finance||TPG Capital India | Matrix Partners India | Norwest Venture Partners||18.6||Sep-23|
|Sula Vineyards||Verlinvest Asia Pte||5.1||Sep-23|
|Medplus Health Services||Warburg Pincus | Premjiinvest||12.1||Aug-23|
|Amber Enterprises India||ADV Partners||3.5||Aug-23|
|SJS Enterprises||Everstone Capital Management||5.5||Aug-23|
|Sansera Engineering||The Rohatyn Group||6.3||Jul-23|
|Bharti Airtel Ltd||Lion Meadow Investment||16.5||Jun-23|
|Kalyan Jewellers India||Highdell Investment||7.3||Jun-23|
|Axis Bank||Bain Capital Private Equity | Integral Investments||21.8||Jun-23|
|Go Fashions||Sequoia Capital India Investments||6.2||Jun-23|
|Coforge||Baring Private Equity Asia||8.9||May-23|
|Campus Activewear||TPG Growth III||8.1||Mar-23|
|Home First Finance Co.(India) Ltd.||Bessemer India Capital Holdings||4.7||Mar-23|
|Shriram Finance||Apax Partners||10.2||Jan-23|
Source: Kotak Institutional Investors
AdvertisementPromoter exist inches up too
Apart from strategic investors, promoters too have sold off shares in the secondary market to the tune of ₹87,000 crore during the year, as per the report. However, it is noteworthy that Adani Group’s ₹37,000 crore sell-off made up for 40% of the promoter holding sales.
“We would attribute only a small portion of promoter sales to bullish equity market conditions. A large portion of the sales by promoters pertains to holding companies of promoters raising cash to manage ‘high’ purported debt in promoter holding companies like Adani Group companies and Vedanta,” says Kotak.
As a result of the sell-downs, promoter holding in the BSE-200 Index has declined to 48.8% in the June 2023 quarter from 50.3% in the December 2023 quarter. These sell-offs were also absorbed by domestic investors including mutual funds, retailers and BFIs. Their combined holding increased by 90 basis points to 23.5% at the end of the June 2023 quarter.
TCS retains No 1 spot as India’s top brand but tech sector takes a hit
AdvertisementElection euphoria to guide Dalal Street ahead of soft Q2 earnings
Popular on BI
- Top 10 must-visit destinations in South Africa
- Indian markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Stock markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Icy pebbles may be carrying water to developing planets across the cosmos!
- With $500 billion in reserves, LIC is the world’s fourth largest insurer