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October 17, 2011

VC firms invest $217-M in Q3’11

Venture Capital firms invested $217 million over 43 deals in India during the three months ending September 2011, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity, Venture Capital and M&A transaction activity in India. These figures take the total VC investments in 2011 to $752 million across 136 transactions (compared to $504 million across 97 deals in the first nine months of 2010 and $707 million across 132 transactions during the entire year).

The amount invested during Q3’11 was flat compared to the same quarter in 2010 (which had witnessed $212 million being invested across 42 deals) and significantly lower compared to the immediate previous quarter ($325 million across 56 deals), the Venture Intelligence study showed.

Information Technology and IT-Enabled Services (IT & ITES) companies attracted the most investments at 21 deals worth about $89 million, followed by Energy and Financial Services companies (that attracted about $47-M and $21-M respectively across 5 deals each). The share of IT & ITES deals dipped to 49% in volume terms (and 41% in value terms) during Q3’11 compared to 55% in volume terms (and 49% in value terms) in the corresponding period a year ago.

Within IT & ITES, Enterprise Software and Mobile VAS companies, that attracted 4 investments each during Q3’11, narrowed the lead of the traditional favorite sector of Online Services (which attracted nine investments). The largest deals in these sectors included online used car exchange service MotorExchange ($13-M from Tiger Global and existing investor Canaan Partners), data backup software provider Druva Software ($12-M from Nexus Ventures and existing investor Sequoia Capital India) and mobile social networking firm SMS Gupshup ($11-M round led by new investor Tenaya Capital).

The latest quarter witnessed two investments in renewable energy producers: Green Infra (a reported $18-M from IDFC PE) and Bharat Light & Power (undisclosed sized investment from DFJ). Green Infra, which was originally incubated by IDFC PE in 2008, has a portfolio of 164 MW of operating assets, with another 100 MW in the pipeline. Bharat Light & Power, founded by Tejpreet S. Chopra, former President and CEO of General Electric India, also plans to multiple renewable sources including wind, solar, bio mass and hydro.

Among Financial Services deals, Sequoia Capital India provided additional funding to electronic transactions enabler Prizm Payment Services (in which it had originally invested in early 2008), while IFC, the World Bank’s private sector investment arm, chose to invest in low cost ATM provider Vortex Engineering and Tata Capital’s special purpose lending vehicle for cleantech projects.

VC firms found exit routes for four portfolio companies in Q3’11 – including one via an IPO (that of Tree House Education). Pre-school chain Tree House Education, backed by Matrix Partners India, Omidyar Network and Foundation Capital, pulled off its IPO in an extremely choppy environment raising $25.3 million. Citrix Systems acquired Nexus Ventures-backed Cloud.com, a US-based provider of software infrastructure platforms for cloud providers, for a reported $200-250 million. Nexus first invested in Cloud.com (then called VMOps) in Aug-09 and reinvested as part of the $11-M second round funding in May-10. The deal represents the third exit by Nexus in the last 12 months: online classifieds website OLX was acquired by Napsters in Sep-10, while open source web-conferencing company Dimdim was acquired by Salesforhttp://www.blogger.com/img/blank.gifce.com in Jan-11. (On October 4, 2011, Nexus announced the acquisition of another of its US-headquartered portfolio company Gluster, a provider of open source storage solutions for standardizing the management of unstructured data, for $136 million by open source software firm Red Hat).

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Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity, venture capital and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in