PDF: 2962 pages, 5.2 MB - Bay Area Council Economic Institute

Global Reach
grew its subscriber base over 1999–2005 from 104,000 to 14 million, and its market capitalization
from $100 million to $15 billion.
Warburg’s stake in the company, in the meantime, had grown to about $1.26 billion, and it decided
to sell a block worth $560 million on the Mumbai Stock Exchange. The question was how
easily the market could absorb such a large block trade, the largest in the Exchange’s history. The
trade was completed in 28 minutes, and Warburg had repatriated its earnings within 48 hours.
From that point, large private equity deals proliferated, among them:
• U.S. generic drugs maker Mylan Laboratories bought a 51.5% stake in Hyderabad-based
contract drugs research and manufacturing firm Matrix Laboratories in August 2006 for
$736 million, providing an exit for TPG Newbridge and Singapore sovereign fund
Temasek Holdings which together held 39% of the company.
• In April 2006, TPG Newbridge invested $100 million in Shriram Transport Finance
Company, a lender in the small truck and commercial vehicle market.
• Providence Equity Partners paid $400 million for 16% of Indian wireless provider Idea
Cellular in October 2006.
• EDS, recently acquired by Hewlett-Packard, bought 52% of BPO firm MphasiS for
$380 million in June 2006, providing an exit for Baring Private Equity of Hong Kong,
which sold its 23.38% stake for about $170 million—14 times what it had paid initially.
• Vodaphone spent $11.1 billion in February 2007 to buy 67% of Hutchison Essar,
winning out in an auction against a partnership of TPG, Blackstone Group, and Reliance
Communications, and gaining a 16% market share in India.
Despite the size of these deals, a 2008 survey by accounting firm Grant Thornton found that
roughly 80–90% of private equity deals in India since 2006 were under $50 million each.
Early 2007 also saw several successful VC exits: Walden International and Global
Technologies took IT services firm MindTree Consulting through a $53 million IPO in
February; and BPO firm FirstSource, formerly ICICI OneSource, floated 23% of its
shares on two Indian stock exchanges, providing exits to WestBridge Capital Partners (now
Sequoia Capital India), as well as to Temasek. M&A exits included software testing company
RelQ, BPO firm Global Vantedge, and radio channel Music Broadcast.
Combined inbound and outbound India merger and acquisition (M&A) deals totaled 553 in 2006,
with a value of $55 billion. Most notable was the $28 billion in mostly debt-funded acquisitions by
Indian firms pursuing vertical integration strategies and establishing global brands. Indian firms
scooped up European and Canadian steel producers, British consulting firms, Indonesian coal
mining concerns, and a German maker of wind power generating facilities, as well as British scotch
distiller Whyte & Mackay.
222