Feb ’10

A RESEARCH PUBLICATION | February 2010

MONTHLY DEAL UPDATEStatistics and analysis of Private Equity, Venture Capitaland Mergers & Acquisitions in India

ContentsPage Number

I. Executive Summary 1

II. Private Equity Deal Flow - Introduction 2 - Deal Breakdown 3 - Sectoral Breakdown 5 - Deal of the Month 6 - Top 5 Private Equity Deals 7

III. Private Equity Exits 8

IV. M&A Round Up - Introduction 9 - Deal Breakdown 10 - Sectoral Breakdown 12 - Deal of the Month 13 - Top 5 M&A deals 14

V. Appendix 15

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EXECUTIVE SUMMARY

• Private equity investment in India in February 2010 grew more than 33% as compared to the same period last year. Private equity firms invested a total of $455 million as against $346 million in February 2009. The total volume of private equity deals was 26, just one deal more than the 25 deals witnessed in February 2009.

• M&A activity in India saw substantial growth on a month on month basis. The total value of deals was $2,317 million in February 2010 as against $162 million in February 2009. In terms of volume, total number of M&A deals increased more than 80% from 28 deals in February 2009 to 51 deals in February 2010.

• The largest private equity deal in February 2010 was Tikona Digital Network, that raised $107 million by selling 70% stake to Goldman Sachs, Indivision India Partners and Oak India Investments. Tower Vision raised $300 million from a consortium led by Quadrangle, however the equity portion is unclear hence has not been included in our report.

• The environment for private exits too has clearly improved with a sharp rise in February 2010 which saw 10 exits worth $475 million as against only 3 exits each In February 2009 and February 2008. The major exits of the month were:

- the $323 million exit by Siva Ventures from Aamby Valley Ltd.

- the $62 million exit by Nalanda Capital from Sun TV Network.

MONTHLY REPORT

There is clearly an increase in deal activity in 2010.However, India will require much more confidence, risk appetite and the urge to grow rapidly before it can get back to the peak levels of 2007 and even 2008.

There is clearly an increase in deal activity in 2010.However, India will require much more confidence, risk appetite and the urge to grow rapidly before it can get back to the peak levels of 2007 and even 2008.

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PRIVATE EQUITYINTRODUCTIONPrivate equity investment in India in February 2010 grew more than 33% as compared to the same period last year. Deal value was $455 million in the second month of 2010 as against $346 million in February 2009. Deal volume, was virtually unchanged with 26 deals recorded in February 2010, one more than the 25 deals witnessed in February 2009.

There was a certain degree of momentum that had been witnessed in the second half of 2009 with $2.8 billion worth of deals as compared to $2 billion in the first half. This continued on a month on month basis in 2010 with deal value in February 2010, 10% higher than that in January 2010, but substantially lower than December 2009.

A look at monthly numbers reveals that four months in 2009 – June, July, September and December had deal values greater than that in February 2010.

In terms of deal value, monthly deal activity began with a slow momentum in Nov ’09 and accelerated in Dec ’09 to reach $586 million. However, this pace could not be maintained in 2010 and deal activity in January was recorded lower at $410 million. There was an upswing in Feb ‘10 with deal value 10% higher at $455 million.

In terms of deal value, monthly deal activity began with a slow momentum in Nov ’09 and accelerated in Dec ’09 to reach $586 million. However, this pace could not be maintained in 2010 and deal activity in January was recorded lower at $410 million. There was an upswing in Feb ‘10 with deal value 10% higher at $455 million.

Exhibit 1: Month Wise Private Equity Trend

Dea

l Val

ue ($

Mn)

Deal Volum

e

(Source: VCCEdge) 2

DEAL BREAKDOWN

With the global private equity markets shrinking, investors have turned away from angel and venture capital deals in general – and India is no exception.

The total number of VC investments announced during Feb ’10 stands at 3 with an announced value of $11 million as against 8 deals with a total announced value of $31.1 million in Feb ’09 and 11 deals amounting to $135.8 million in Feb ’08.

Exhibit 2: Private Equity Breakdown

(Source: VCCEdge)

PRIVATE EQUITY

Exhibit 3:Median Deal Amount breakdown

The median deal value in Feb ’10 declined to $10 million as the volume of larger deals (particularly deals > $100 million) declined.

Exhibit 4: Average deal size in ($million)

(Source: VCCEdge)

(Source: VCCEdge)

3

$145Mn $139Mn $537Mn $2029Mn $346Mn $455Mn

DEAL BREAKDOWN

PRIVATE EQUITY

Exhibit 5: Number of transactions by Deal Size Exhibit 6: Total investment by Deal Size

Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Undisclosed 2 9 7 13 4 7 Under $ 5m 6 3 5 4 9 1 $5 - $25 m 2 11 7 9 9 13 $25-$50 m 2 - 3 6 2 2 $50 -$100 m 1 - 2 - - 2 $100+ - - 2 8 1 1

Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Under $ 5m 17 7 8 10 21 2 $5 - $25 m 23 133 77 108 94 158 $25-$50 m 56 - 97 186 71 83 $50 -$100 m 50 - 106 - - 104 $100+ - - 250 1727 161 107

(Source: VCCEdge) (Source: VCCEdge)4

Private equity deals under $100 million continued their upward trend, accounting for 95% of total deal flow in Feb ’10.

Larger deals ($ 100 million and above) accounted for 76% of total capital invested in Feb ’10.

Banking, Finance & Insurance, Telecom and Education were the most targeted sectors for investment with deals worth $125 million, $107 million and $53 million respectively. Together, they accounted for more than 62% of total private equity deal value during the month.

Major PE investments influencing the deal values of these sectors were investments in Tikona Digital Networks, Ambit Corporate Finance, Integreon, Manipal Universal Learning and Multi Commodity Exchange of India. The other sectors, which have significantly contributed to private equity deal value in Feb ’10, are IT/IT Services and Real Estate accounting for 21% of total deal value.

SECTORAL BREAKDOWNPRIVATE EQUITY

The most active sectors in terms of deal volume were Banking, Finance & Insurance with 6 deals in the month, followed by IT/IT Services and Real Estate with 4 deals each. Other sectors contributing to the deal volume were Telecom and Education accounting for 2 deals each. As seen in Feb ’09, Feb ’10 also saw a large number of deals in IT/IT Services .

Sno. Sector Value ($Mn)Volume Avg Deal Size*1 Banking, Finance &

Insurance 125 6 312 Telecom 107 2 1073 Education 53 2 274 IT/IT Services 50 4 505 Real Estate 50 4 17

Exhibit 7: Top 5 Sectors by Deal Value in Feb’ 10 ($mn)

(Source: VCCEdge)

Exhibit 8: Top 5 Sectors by Deal Volume for the month Feb’ 10

(Source: VCCEdge)

5*based on disclosed deal values

PRIVATE EQUITYDEAL OF THE MONTH

Target : Tikona Digital Networks Pvt. Ltd. Announced : 10-Feb-10

Indivision India Partners, Oak Investment Partners, Goldman Sachs

Industry : Telecom Deal Feature : Co investing (Source: VCCEdge)

Tikona Digital Networks, the wireless Internet broadband service provider, raised $107.1 million (INR 500 crores) from three PE investors by selling a 70% stake. The investors include Goldman Sachs, Indivision India Partners and Oak India Investments.

Tikona Digital Networks (TDN) designs and develops wireless broadband services for home and enterprise customers in India. TDN provides edge voice, video, IT applications and multimedia content services over any broadband or IP centric network. Tikona is engaged in building the next generation wireless broadband services for home and enterprise customers in India. It has an all India class A ISP license granted by the Ministry of Communications, Govt. of India, for this purpose. The company was founded in 2008 by Rajesh Tiwari and Prakash Bajpai.

The broadband service provider will use the funds to expand its network coverage to 50 cities by 2010 from the current 10 cities it has operations in.

The company is also looking at raising additional funds of up to INR 1200 crore by 2011 and has already submitted its proposal to the Foreign investment and promotion board (FIPB) to raise Foreign Direct Investment (FDI).

Buyer : Deal Value ($ mn): 107.1

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PRIVATE EQUITY

The largest deal by value was Tikona Digital Networks which raised INR 500 crore from Goldman Sachs, Indivision India Partners and Oak India Investments by selling a 70% stake.

This was followed by the investment made by Qinvest LLC in Ambit Corporate Finance Pte. Ltd. and Actis LLP’s investment in Integreon Managed Solutions, Inc .

The Top 5 deals occurred across various sectors.

TOP 5 PRIVATE EQUITY DEALS

Exhibit 9: Top Private Equity deals in Feb ‘10

The top 5 PE deals accounted for more than 63% of the total private equity deals in Feb ’10. In Feb ’09, the top 5 deals had accounted for more than 76% total value for the month.

(Source: VCCEdge)

S.No. Industry Target Buyer PE Type Deal Value ($ mn)

Indivision India Partners, Oak Investment Partners, Goldman Sachs

2Banking, Finance,

Insurance Ambit Corporate Finance Pte. Ltd. QInvest LLC Private Equity 54

3 IT/IT Services Integreon Managed Solutions, Inc Actis LLP Private Equity 50

4 Education Manipal Universal Learning Pvt. Ltd. PremjiInvest Fund Private Equity 43

5Banking, Finance,

Insurance Multi Commodity Exchange of India Ltd.

Ashmore Investment Management Ltd. Private Equity 40

Tikona Digital Networks Pvt. Ltd.Telecom1 Private Equity 107

7

(Source: VCCEdge)

PRIVATE EQUITYPRIVATE EQUITY EXITS

Exhibit 10: Top Private Equity Exits in Feb ’10

The month of Feb ‘10 saw 10 exits worth $475 million. In comparison there were only 3 exits each In Feb ’09 and Feb ’08.

Exhibit 11: Private Equity Exits in Feb’ 10(Source: VCCEdge)

S.No. Sector Target Buyer Exit Type Deal Value ($ mn)1 Real Estate Aamby Valley Ltd. Siva Ventures Ltd. Buyback 323

2 Media & Entertainment Sun TV Network Ltd. Nalanda India Fund Open Market 61

3Media & Entertainment Hathway Cable & Datacom

Limited ChrysCapital & Morgan Stanley India IPO 40

4 Logistics SpiceJet Ltd. Istithmar World Capital Open Market 36

5 Logistics Pipavav Shipyard Ltd. 2i Capital PCC Open Market 21

8

Dea

l Val

ue ($

Mn) D

eal Volume

(Source: VCCEdge)

MERGERS & ACQUISITIONINTRODUCTION

Exhibit 12: Month Wise M&A Trend

In terms of deal value, the monthly deal activity began with a slow momentum in Nov ’09, accelerated in Dec ’09 to reach $2,991 million. However, this pace could not be maintained in 2010 and deal activity recorded a dip in Jan ’10 & Feb ’10 with deals worth $2,816 million and $2,317 million respectively.

In terms of deal value, the monthly deal activity began with a slow momentum in Nov ’09, accelerated in Dec ’09 to reach $2,991 million. However, this pace could not be maintained in 2010 and deal activity recorded a dip in Jan ’10 & Feb ’10 with deals worth $2,816 million and $2,317 million respectively.

M&A deal value during February 2010 stood at $2,317 million, 13 times the same period last year. Deal count also witnessed an upward trend and increased by 82% to 51 deals in February 2010, as compared to 28 deals witnessed during February 2009.

There was a certain degree of momentum that had been witnessed in the second half of 2009 with $8.4 billion worth of deals as compared to $6.6 billion in the first half. However on a month on month basis deal value in February 2010 was substantially lower than that in Jan ’10 and Dec ’09.

A look at monthly numbers reveals that two months in 2009 – March and December had deal values greater than that in February 2010.

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The number of domestic deals increased from 18 and 8 in Feb ’08 & Feb ’09 respectively to 23 in Feb ’10. The value of domestic deals was $980 million in Feb ’10 compared to $4 million in Feb ’09.

In terms of volume, the number of outbound deals more than doubled from 8 in Feb ’09 to 18 in Feb ’10.

The number of inbound deals was virtually unchanged with 8 deals in Feb ’10, one less than the 9 deals witnessed in Feb ‘09.

DEAL BREAKDOWNExhibit 13: M&A Breakdown

(Source: VCCEdge)

MERGERS & ACQUISITION

$395Mn $443Mn $19,237Mn $2,689Mn $162Mn $2,317Mn

Exhibit 14:Median Deal Amount breakdown

The median deal value in Feb ’10 increased to $22 million as the volume of larger deals increased.

Exhibit 15: Average deal size in ($million)

(Source: VCCEdge)

(Source: VCCEdge)10

DEAL BREAKDOWN

Exhibit 16: Number of transactions by Deal Size Exhibit 17: Total M&A volume by Deal Size

M&A deals under $100 million showed an upward trend, accounting for more than 80% of deal flow in Feb ’10.

Larger deals ($ 100 million and above) continued their dominance accounting for 72% of total capital invested in Feb ’10.

Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Undisclosed 7 6 12 21 17 23 Under $ 5m 5 4 4 4 7 5 $5 - $25 m 2 3 8 7 1 10 $25-$50 m 2 3 2 7 2 5 $50 -$100 m - - - 2 1 3 $100+ 1 2 7 1 - 5

Feb'05 Feb'06 Feb'07 Feb'08 Feb'09 Feb'10 Under $ 5m 8 13 6 10 13 10 $5 - $25 m 22 50 96 99 5 136 $25-$50 m 57 112 78 258 68 197 $50 -$100 m - - - 121 76 249 $100+ 309 267 19056 2200 - 1724

(Source: VCCEdge) (Source: VCCEdge)

MERGERS & ACQUISITION

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Telecom, Agriculture and Real Estate were the most targeted sectors for investment with deals worth $867 million, $358 million and $323 million respectively. Together, they accounted for more than 65% of total private equity deal value during the month.

The most active sectors in terms of deal volume was Manufacturing with 11 deals in the month. Followed by Telecom, Agriculture and Banking, Finance & Insurance with 4 deals each in Feb ’10. Other sector contributing significantly to deal volume Real Estate accounting for 2 deals . As seen in Jan ’09, Jan ’10 also saw a large number of deals in Manufacturing.

The major transactions influencing the deal values of these sectors were transactions in Essar Telecom Infrastructure, Unitech Wireless Ltd. and Equipav SA Acucare amongst others. Other sectors, which have significantly contributed to M&A deal value in Feb ’10, are Manufacturing and Banking, Finance & Insurance, both accounting for 21% of total deal value.

SECTORAL BREAKDOWN

Exhibit 18: Top 5 Sectors by Deal Value for the month Feb’ 10 ($mn)

Exhibit 19: Top 5 Sectors by Deal Volume for the month Feb ’10(Source: VCCEdge)

(Source: VCCEdge)

MERGERS & ACQUISITION

Snos. Sector Value ($Mn) Volume Avg Deal Size *

1 Telecom 867 4 289

2 Agriculture 358 4 119

2 Real Estate 323 2 323

4 Manufacturing 262 11 37

5 Banking, Finance & Insurance

243 4 121

12

*based on disclosed deal values

MERGERS & ACQUISITIONDEAL OF THE MONTH

(Source: VCCEdge)

Target : Unitech Wireless Ltd. Announced : 10-Feb-2010

Telenor ASA 433.4

Industry : Telecom Deal Feature : Strategic Investment

Buyer : Deal Value ($ mn):

Telenor, a Norway-headquartered telecom major, hiked its stake in Unitech Wireless, with an investment of $433.4 million (INR 2,022 crore). Post this transaction, the investors stake has increased to 67.25% from the 60.1% held earlier.

Unitech Wireless is a joint venture company of real estate firm Unitech Ltd and Nordic telecom giant Telenor Group. It launched its India operation across eight circles initially, under the brand name Uninor. The eight circles include Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West and Bihar.

.

Unitech Wireless was founded in 2008 and is based in New Delhi. With this fresh round of funding, Telenor’s total investment in Uninor stands at INR 6,135 crore. This is the fourth and final tranche by Telenor into the firm.

(Source: VCCEdge)

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MERGERS & ACQUISITION

Exhibit 20: Top M&A deal in Feb ’10

The largest deal by value was Telenor ASA acquisition of a 7.15% stake in Unitech Wireless Ltd. for a price of $433.4 million. This was followed by, Transend Infrastruture’s $433 million buyout of Essar Telecom Infrastructure and Shree Renuka Sugars’ acquisition of a 51% stake in Equipav SA Acucare Alcool for a price of $334 million.

Top deals have occurred across various sectors. Two of the top five deals were in the Telecom sector.

TOP 5 M&A DEALS

The top 5 M&A deals accounted for more than 71% of the total M&A deals in Feb ’10. In Feb ’09, top 5 deals accounted for more than 94% of total value for the month.

(Source: VCCEdge)

Snos. Sector Target Buyer M&A Type Value1 Telecom Unitech Wireless Ltd. Telenor ASA Inbound 433.4

2 Telecom

Essar Telecom Infrastructure Pvt. Ltd.

Transcend Infrastructure Ltd. Domestic 433

3 Agriculture Equipav SA Acucare Alcool Shree Renuka Sugars Ltd. Outbound 334.7

4 Real Estate Aamby Valley Ltd. Sahara India Commercial Corp. Ltd.

Domestic 323

5 Banking, Finance,

Insurance Northgate Capital LLC Religare Enterprises Ltd. Outbound 200

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APPENDIXMOST ACTIVE INVESTMENT BANKS AND LAW FIRMS

Motilal Oswal Investment Advisors Pvt. Ltd. SBI Capital Markets Limited Angermann M&A International GmbH Banco Itau BBA SA Blend Financial Services Ltd. Enam Securities Pvt. Ltd. Equirus Capital Pvt. Ltd. Ernst & Young Pvt. Ltd. Grant Thornton ICICI Securities Ltd. IL&FS Financial Services Ltd. Jefferies India Pvt. Ltd. Kalozal Consultants Pvt. Ltd. Kotak Investment Banking Mape Advisory Group Pvt. Ltd. Marks Baughan & Co, LLC Merrill Lynch & Co. Inc. o3 Capital Global Advisory Pvt. Ltd. Singhi Advisors Limited Viedea Capital Advisors Pvt. Ltd. Yes Bank Ltd.

Active Investment Banks in 2010

AZB & Partners Desai & DiwanjiIndus G&D Law Khaitan & Company LexygenNishith Desai Associates Rajani Associates Allen & Overy LLP ALMT Legal Argus Partners Davis Polk & Wardwell LLP Goodwin Procter LLP MMB Legal Naik Naik & Co. Reed Smith Richards Butler LLP Tatva Legal Vaish Associates Sand Hill Counsel

Active Law Firms in 2010

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